Long-term interest rates continued to drop during the week ended January 8 according to data released by Freddie Mac Thursday morning.

The Primary Mortgage Market Survey recorded the tenth consecutive week of mortgage rate declines and the 30-year fixed-rate mortgage (FRM) established yet another record low of 5.01 percent with 0.6 point compared to 5.10 percent with 0.7 point for the last week of 2008.

This establishes another benchmark low for the Freddie Mac survey which has been tracking interest rates since 1971.

The 15-year FRM dropped 21 basis points to 4.62 percent, the lowest rate since June 13, 2003 when the rate was 4.60 percent.  Fees and points both this week and last were 0.7 point.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) had an average contract interest rate of 5.49 with 0.7 point for the week just passed compared with a rate of 5.57 percent with 0.7 point the previous week.

One-year Treasury-indexed hybrid ARMs averaged 4.95 percent with 0.5 point, an increase from 4.85 percent with 0.5 point a week earlier.

"Interest rates for 30-year fixed-rate mortgages fell for the tenth week to a fourth consecutive record low due in part to the Federal Reserve's recent purchases of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae,"  according to Frank Nothaft, Freddie Mac vice president and chief economist.  "On November 25, 2008, the Federal Reserve announced that it planned to purchase up to $500 billion of these securities by the end of June of this year. For the sake of comparison, there were roughly $4.7 trillion of such securities backed by home mortgages available as of September 30, 2008.

"Since the end of October 2008, these rates have declined by almost 1 1/2 percentage points, or payment savings of about $184 a month for a $200,000 loan, an additional $11 dollars from last week."

Earlier in the week Fannie Mae released information on yields for the week ended January 2.  The rates do not include servicing fees.

The yield on 30-year FRM was 4.49 percent compared to 4.53 percent one week earlier and the 15-year FRM averaged 4.14 percent, down from 4.410 during the last full week of 2008.  Government insured mortgages - FHA and VA - carried a rate of 5.52, a substantial decrease from 6.01 the week before.

The rate for a one-year ARM was 4.420, up from 4.39 during the week ended December 26.