McLEAN, VA -- In Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 5.85 percent, with an average 0.7 point, for the week ending January 2, 2004, up just a few basis points from 5.81 percent last week. Last year at this time, the 30-year FRM averaged 5.85 percent.

The average for the 15-year FRM this week is 5.15 percent, with an average 0.7 point, up slightly from last week's average of 5.13 percent. A year ago, the 15-year FRM averaged 5.24 percent.

One-year Treasury-indexed adjustable-rate mortgages (ARMs) averaged 3.72 percent this week, with an average 0.7 point, down very slightly from 3.73 percent last week. At this time last year, the one-year ARM averaged 4.06 percent.

"The yield curve, at its steepest annual level since 1992, is indicative of a favorable ARM market," said Amy Crews Cutts, Freddie Mac deputy chief economist. "We have already seen the ARM share of applications double from January to December of this year, and it now represents almost a third of the market.

"With the Federal Reserve on hold until at least June, the yield curve should continue to be steep and once we begin to see signs of inflation, it may well become ever steeper, at least until the Fed raises short-term rates. Until then, the savvy homebuyer or refinancer has the option of lowering monthly mortgage payments by choosing one of the many ARM products available today."