The 30-year fixed rate mortgage averaged 5.98% in Freddie Mac’s Primary Mortgage Market Survey this week. The 30-year is down two BPS (basis points) from last week and up from 5.67% a year ago.

The average 15-year fixed rate mortgage was 5.39%, Freddie reported, barely changed from the prior week. The spread between the 30-year and the 15-year was 59 BPS — where it has lingered near during the past month.

Don’t look for much change in rates over the next 45 days; 60% of those surveyed by Bankrate.com this week expect rates to remain unchanged, while the rest are evenly split between rising (20%) and falling (20%) rates.

Noting that Federal Reserve Chairman Alan Greenspan’s recent comments were more upbeat than anticipated, Freddie’s chief economist Frank Nothaft said, “Stronger growth in the economy will invariably translate into higher mortgage rates in the future, particularly for ARM products. But this should be offset by job growth and by rising incomes nationwide.”

In line with Nothaft’s comments, the average one-year ARM (adjustable rate mortgage) jumped 10 BPS to 4.12%, according to the survey. The spread between the 1-year ARM and the 30-year fell to 1.86%. It had been as wide as 2.45% in May.

Reflecting the less attractive spread, ARM applications represented a smaller portion of overall applications — edging down slightly to 31.3%, according to the Mortgage Bankers Association’s (MBA) weekly survey of mortgage bankers, commercial banks and thrifts.

MBA reported that overall loan applications were down 4% — bringing the Market Composite Index to 617.9. A year ago the index was 1284.3. Refinance applications were mostly unchanged, while the Purchase Index fell 6.1%. Refinances made up 37% of applications, up from 36% the prior week.

The 10-year Treasury-note yield was off 1 BPS to yield 4.44% with a price of 102 13/32 in late morning trading Friday. Last week the yield was reported at 4.48% with a price of 102 3/32.