By Alan Zibel -- AP Real Estate Writer
WASHINGTON (AP) — Rates on 30-year mortgages fell to the lowest level on record for the second consecutive week after the Federal Reserve launched a new effort to assist the staggering U.S. housing market

Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages dropped to 4.78 percent this week, from 4.85 percent last week.

It was the lowest in the history of Freddie Mac's survey, which dates back to 1971. Rates are down by more than a full percentage point from a year ago.

"Mortgage rates followed other interest rates lower this week amid reports of slower economic growth" Frank Nothaft, Freddie Mac vice president and chief economist, said in a prepared statement.

Low rates have sparked a surge in refinancing activity. The Mortgage Bankers Association said Wednesday its weekly application index climbed 3 percent for the week ended March 27, on top of a 30 percent increase a week earlier. Nearly 80 percent of applications came from borrowers seeking to refinance.

Mortgage rates fell dramatically over the winter and have fallen further after the Federal Reserve said last month it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans.

Lenders, however, have tightened their standards dramatically over the past year, so the best rates are available to those with solid credit.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

The average rate on a 15-year fixed-rate mortgage dropped to 4.52 percent this week, from 4.58 percent last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages fell to 4.92 percent, compared with 4.96 percent last week. Rates on one-year, adjustable-rate mortgages fell to 4.75 percent, from 4.85 percent.

The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for all mortgages in Freddie Mac's survey except for one-year adjustable mortgages, which had an average fee of 0.6 point.

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