BEND, Ore. (CNN/Money) – Mortgage rates continue to defy expectations.

Though most economists predicted that interest rates would steadily increase in 2004, rates are flirting with the record lows posted last summer.

Housing by the numbers Rates expected to stay low in 2004 Year  30-year fixed rate  Median home price  2003  5.8 percent  $169,600  2004  5.6 percent  $176,100  2005  6.3 percent  $183,000   Source: Mortgage Bankers Association

For the week ended March 11, the rate on 30-year fixed-rate mortgages averaged 5.41 percent, according to mortgage finance firm Freddie Mac.

On Monday, the Mortgage Bankers Association (MBA) adjusted its long-term forecast to reflect its new outlook for interest rates. In January, the MBA predicted that average annual rates for the 30-year fixed mortgage would increase from 5.8 percent in 2003 to 6.1 percent in 2004.

Current Mortgage Rates   Type Overall avgs 30 yr fixed mtg 6.46% 15 yr fixed mtg 5.99% 30 yr fixed jumbo mtg 7.50% 5/1 ARM 5.91% 5/1 jumbo ARM 6.41% Find personalized rates:

The industry group is now predicting that the 30-year rate will average 5.6 percent in 2004. According to MBA chief economist Douglas Duncan, that's the lowest average annual rate in more than four decades.

Rates have stayed low for a number of reasons, according to Duncan. But, the most significant factor behind low rates is slower-than-expected job growth. "Jobs growth has not been strong enough for the Fed to begin raising short term interest rates at any time soon," said Duncan in a release.

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Despite record low interest rates, the MBA doesn't expect home sales to be quite as strong as they were in 2003 when home ownership in America reached an all-time high. The number of existing homes sold this year is expected to drop slightly. The median existing-home price is expected to increase less than 4 percent to $176,100.

There may not be as many first-time home buyers entering the market in 2004, said Duncan. Also, high home prices in some areas and only modest employment growth may offset lower rates.