"Just when we were sure mortgage rates couldn't possibly drop any lower, we were surprised yet again," said Frank Nothaft, Freddie Mac chief economist. "Current issues such as the possibility of military actions abroad, heightened terrorism alerts and an unexpected drop in consumer confidence contributed to the decline in mortgage rates this week.

"Given the amount of uncertainty about the future, it is very difficult to make any predictions about mortgage rates in the near term. We continue to expect, however, that rates will hover around 6 percent for at least another few months."

In Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 5.85 percent, with an average 0.6 point, for the first week in January. Last year at the same time, the 30-year FRM averaged 7.14 percent. The 30-year fixed rate has not been this low since Freddie Mac began tracking it in 1971, and when compared to figures from the Federal Housing Finance Board, it has not been this low since the early 1960s.

The average for the 15-year fixed rate mortgage was 5.24 percent, with an average 0.6 point. A year ago, the 15-year fixed rate averaged 6.62 percent. The 15-year fixed rate meets the lowest level ever recorded in Freddie Mac's weekly survey.

Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to jnewton@jnpr.com.