The 30-year fixed-rate mortgage average came in at 5.41% this week — a whopping 18 basis points (BPS) lower than last week, according to Freddie Mac’s latest Primary Mortgage Market Survey. At this time last year, the rate averaged 5.61%.

Down 19 BPS, Freddie averaged the 15-year at 4.69%.

“For the year as a whole, we expect long-term rates may be even lower annually than they were in 2003,” said Freddie’s chief economist.

Freddie reported the average for the 1-year Treasury adjustable-rate mortgage (ARM) fell 6 BPS from last week to 3.41% — the lowest level since it began tracking these figures 20 years ago. ARMs will likely make up a larger share of originations this year — perhaps the highest since 1995, said the secondary lender. Meanwhile, the latest market application activity survey by the Mortgage Bankers Association of America (MBA) showed ARM activity nudged down to 28.1% of total applications.

Plunging mortgage rates were prompted by Treasury yields that fell after the government released its monthly employment report last week. While a 125,000 increase was expected in nonfarm payroll jobs, only 21,000 net jobs were reportedly created.

In late trading afternoon today, the 10-year note yielded 3.72% at a price of 102 9/32. Last Thursday, a day before the employment report, the note closed at yield of 4.01% and price of 99 26/32.

A “weak labor market means that the Fed will continue an accommodative monetary policy,” Freddie said in its March economic outlook, “keeping the Federal Funds target at 1 percent into the third quarter, and perhaps through to the end of the year.”

In turn, long-term rates will remain low for much of the year, with the 30-year ending at an annual average of about 5.75%, according to the outlook.

As for short term predictions, 46% of the mortgage panel surveyed this week by Bankrate.com voted rates would remain unchanged (plus or minus 2 BPS) over the next month and a half. The rest of the panel was split evenly on whether rates would go up (27%) or down (27%).

An analyst for the site who voted rates would remain unchanged said that “after last week’s drop, rates are poised to remain near present levels until spurred by impressive job growth or an unexpected Fed statement.”

The MBA said overall mortgage application activity decreased 1.2% from the previous week, which brought the Market Composite Index to 889.1. The application data consists of information one week behind Freddie’s weekly rate data. Last year at this time this Index increased was at a record 1603.1.

All application type indices — Purchase, Refinance, Government and Conventional — edged up by about 1% from the previous week, said the Washington D.C. trade group.