The 30-year fixed-rate mortgage average slipped two basis points within the past week to 5.91%, Freddie Mac said today in its Primary Mortgage Market Survey. The 30-year is two BPS higher than a year ago.

The decrease reportedly marks the second time the 30-year has fallen since hiking up almost half a percentage point in a period of about two months.

“Given the current economy, mortgage rates can only rise so much in a short period of time,” said Freddie chief economist Frank Nothaft in the prepared statement. “And the recent release of the minutes of the [Federal Open Market Committee] meeting muted market chatter about inflation, allowing rates to slip a little further this week.

“While we still expect mortgage rates to rise to perhaps as high as 6.50 percent by the end of the year, that escalation in rates will be gradual and restrained.“

In its April forecast, Freddie said “the first quarter of 2005 might be the last quarter to record thirty-year fixed-rate mortgages below 6% for a while. From the second quarter onward we see this mortgage rate staying above this level.”

Sixty percent of the 100 mortgage “experts” at Bankrate.com predicted that rates will rise over the next 35 to 45 days, while the rest were evenly split between falling rates and unchanging rates.

The 10-year Treasury-note was trading at a yield of 4.37% near midday, down from 4.41% seven days ago. The price was 97.06, up from 96.75 last week.

The 15-year also edged down two BPS from last week to 5.46%, Freddie reported.

The same decrease was seen in the 5-year Treasury-indexed hybrid adjustable-rate mortgage, which averaged 5.31% this week.

The only increase occurred in the 1-year Treasury-indexed ARM — up seven BPS to 4.30%.

Even so, the share of ARM applications nudged up during the past week to 36%, the Mortgage Bankers Association reported, while the refi share was mostly unchanged at 38% — despite a reported rise in refinance requests.

Overall application activity improved — with both purchase money and refinance requests increasing 6% — pushing the measure of applications, the Market Composite Index, to 683.6 for the week ending April 8.