Ever since Freddie Mac started the Primary Mortgage Market Survey in 1971, the interest rate for 30-year fixed-rate mortgages fell to its lowest level for the week ending December 18.

The average rate dropped 5.19 percent, which has driven up mortgage applications, especially from homeowners seeking to refinance. The refinance share of mortgage activity rose to 76.9 percent of total applications from last week's 74.3 percent.

Last week, the rate averaged 5.47 percent for the seventh time in succession, with the 30-year mortgages having averaged 6.14 percent a year back.

There was also a fall in the average contract interest rate for 15-year fixed-rate mortgages. It fell from last week's 5.20 percent to 4.92 percent. After April 2004, when it averaged 4.48 percent, it has not gone that low. 15-year fixed-rate mortgages averaged 5.79 percent at this same time last year.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs), which averaged 5.90% a year back, averaged 5.60% this week, down from last week's 5.82%.

Similarly, one-year Treasury-indexed ARMs, which at this time last year averaged 5.51%, averaged 4.94% this week, down from last week's 5.09%.

Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement: "The decline was supported by the Federal Reserve announcement on December 16, when it cut the federal funds target to a record low and stated it stood ready to expand its purchases of mortgage-related assets as conditions warrant."