Rates stopped climbing, with the 30-year fixed-rate mortgage average remaining unchanged from the prior week’s 6.05%, reported Freddie Mac in its Primary Mortgage Market Survey. A year ago it averaged 6.31%.

The average 15-year edged up 3 basis points (BPS) to 5.39%, according to the survey.

Freddie pointed out there was no financial news during the week to cause rates to change significantly.

Freddie said the one-year Treasury-indexed adjustable-rate mortgage (ARM) average decreased 3 BPS from the prior week to 3.76%. Accordingly, the share of ARM applications increased barely from 25.2% the prior week to 26.2%, reported the Mortgage Bankers Association of America (MBA).

According to Bankrate.com, “next week may be a bit meatier as the Federal Reserve Open Market Committee gathers to decide what direction short-term interest rates should take.” Correspondingly, 43% of Bankrate.com mortgage industry panelists predicted rates would rise, 29% foresaw a fall, and 28% voted rates would remain unchanged.

Overall mortgage loan applications for purchases and refinances followed the quiet path, according to the MBA’s Weekly Mortgage Applications Survey. The Market Composite Index for the week ending October 17 came in at 652.8, indicating applications only recovered 0.5% from the prior weeks 20.5% slump. At the same time last year this index measured 1128.3.

The recent survey shows homebuyers applied for purchase mortgages 7.5% more than the prior week, and refinances applications were 5.8% less. The Purchase Index increased to 386.1, while the Refinance Index fell to 2204.1. At the same time last year the Refinance Index stood at 5588.7. The refinance share of applications decreased from the prior week’s 53.9% to 50.5%.

In relation to its long-term forecast, the MBA announced that single-family originations will break purchase and refinance market records at the year’s end. Purchases will remain flat through the coming year at $1.1 trillion and increase to $1.2 trillion in 2005. Meanwhile, 2003 refinancings will represent 66% of total originations amounting to $2.2 trillion, but will only account for 21% of originations by 2005.

The group anticipates strong economic growth with the real gross domestic product increasing at annual rates of 4%. Rapid economic growth will generate job creation, said MBA. By 2005, the unemployment rate will decrease gradually as jobs grow significantly with levels up to 133 million by 2005.

And while economic expansion signals a rise in rates, a chief economist for the MBA said, “if the financial markets are convinced that monetary policy will remain on hold, we will not see a quick run-up in rates. The 10-year Treasury bond yield will slowly move from 4.2 percent in the third quarter to 5.1 percent in the fourth quarter of 2005.”

Speaking of the 10-year Treasury bond, the note closed Thursday at 4.31%, 15 BPS lower than reported last week. The price increased from last week’s 98 10/32 to 99 15/32.

MBA predicted “mortgage rates will gradually increase from 5.9 percent in the third quarter of 2003, reaching only 7 percent in 2005. Single-family home production and purchases will therefore remain robust. The market will proceed at a robust pace, slightly slower than the record volumes reached during the period of historic low rates in 2002 and 2003.” Multifamily residential and commercial sectors should pick up in the middle of next year and retain strength through 2005, the group said.