Interest rates continued their slow but steady decent during the week ended December 31 according to results of the Primary Mortgage Market Survey released by Freddie Mac Wednesday morning.

The 30-year fixed-rate mortgage (FRM) hit yet another historic low during the week averaging 5.10 percent, the lowest rate since Freddie Mac initiated the survey in 1971.  A week earlier the 30-year averaged 5.14 percent, the record low at that time.  Fees and points dropped from 0.8 to 0.7 this week.

The 15-year FRM averaged 4.83 percent, a decrease of 8 basis points from the previous week.  This is the lowest rate for the 15-year since the week ended March 25, 2004 when it averaged 4.70 percent.  Fees and points were unchanged at 0.7.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.57 during the most current week.  This was an increase from the 5.49 percent average for the week ended Christmas Eve.  Fees and points increased from 0.6 to 0.7 point.

The average contract interest rate for the one-year Treasury-indexed ARM was 4.85 percent with 0.5 point, down from the previous week's rate of 4.95 percent with 0.6 point.

"Interest rates for 30-year fixed-rate mortgages fell for the ninth straight week and represented a third consecutive all time record low since Freddie Mac's survey began in April 1971," said Frank Nothaft, Freddie Mac vice president and chief economist.  "Since the end of October of this year, these rates have declined by about 1-1/3 percentage points, or payment savings of approximately $173 a month for a $200,000 loan.  As a result, the number of refinance applications for conventional mortgages jumped over 500 percent between the weeks ending on October 31^st and December 26^th.

"Lower rates and falling house prices are also making homeownership more affordable to potential homebuyers.  For instance, house prices fell 18 percent over the 12-month period ending in October, according to the S&P/Case-Shiller® 20-city composite index.  Every city posted a second consecutive month of decline in October.  From its peak set in July 2006, the composite index is down 23.4 percent/"

Fannie Mae earlier reported the weekly yields for the week ended December 26.

Conventional 30-year FRMs averaged 4.530 percent, up from 4.260 one week ago.  The 15-year FRM carried an average of 4.410 percent compared to 4.180 percent during the week ended December 19.  Government insured (FHA/VA) 30-year loans were at 6.010 percent, six basis points higher than the previous week.

The one-year ARM was down slightly from 4.50 percent to 4.390 percent.