Ever since April 1971 when Freddie Mac started surveying lenders, the rates on mortgage loans fell to a record lowest - the third straight low in the ninth straight weekly drop 
- for the week ending December 31. From a 6.06% last year, the 30-year fixed rate fell to its previous recent low 5.14% last week, and now to a 5.1% the week that just ended.

The most recent average 15-year, fixed rate loan was 4.83%, which is marginally above its lowest level of 4.70% on March 25, 2004.

With the falling mortgage rates, borrowers - especially those with solid credit and plenty of equity in their homes - are lapping up the opportunity, as the inflow of new applications indicates. According to the Mortgage Bankers Association, mortgage applications last week were the highest in more than five years. 

In a statement, Freddie's chief economist, Frank Nothaft, said: "Since the end of October of this year, these rates have declined by about 1-1/3 percentage points. As a result, the number of refinance applications for conventional mortgages jumped over 500 percent between the weeks ending on October 31st and December 26th."

The plunging interest rates have resulted from the Federal Reserve buying up mortgage-backed securities to reinforce the long-suffering housing market. Early next month, the Fed intends buying up to $500 billion in securities guaranteed by the government-controlled home loan giants Fannie Mae, Freddie Mac and Ginnie Mae.

In case that comes through, mortgage rates are expected to fall even further to a possible of 4.5 percent.