Mortgage rates fell for the 8^th straight week in the week ended December 24, establishing a new low for Freddie Mac's Primary Mortgage Market Survey.

The 30-year fixed-rate mortgage (FRM) averaged 5.14 percent with 0.8 point, down from last week when it averaged 5.19 percent with 0.7 point in fees.  This is 98 basis points lower than the rate during the same week in 2007 and the lowest rate recorded since Freddie Mac first conducted the survey in 1971.

The 15-year FRM had an average contract interest rate of 4.91 percent, down a single basis point from last week.  Fees and points were unchanged at 0.7.  This was the lowest rate for the 15-year FRM since April 1, 2004 when it was 4.84 percent.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) had an average interest rate of 5.49 percent with 0.6 point.  One week ago it averaged 5.60 percent with 0.6 point.

The short-term (one-year) ARM was up a single basis point to 4.95 percent.  Fees and points were also up from 0.5 to 0.6 point.

"Interest rates on 30-year fixed-rate mortgages eased for the eighth straight week and set another record low since Freddie Mac's survey began in 1971," according to Frank Nothaft, Freddie Mac vice president and chief economist.  "Real GDP growth fell 0.5 percent in the third quarter of the year, pulled down by the largest drop in consumer spending since the second quarter of 1980.  The market consensus calls for an even larger decline in the last three months of the year.

"The housing market, meanwhile, continues to contract.  Existing home sales (excluding condominiums and co-ops) fell 8.6 percent in November to 4.0 million houses (annualized) in November, representing the slowest pace since July 1997.  Moreover, the median sales price fell 12.8 percent from November 2007, the largest 12-month decline since records began in January 1968, according to the National Association of Realtors®"

Earlier in the week Fannie Mae posted its fixed and adjustable rate yields for the week ended December 19.  The 30-year FRM averaged 4.260 percent compared to 4.69 a week earlier.  The 15-year FRM average was 4.180, down from 4.520 a week earlier, and FHA/VA mortgages dropped from 6.09 to 5.410 over the week.

The one-year ARM was down only slightly to 4.50 from 4.520.