The rate is the lowest since Freddie Mac began tracking the data in 1971.
The dip is credited to an aggressive government campaign to reduce borrowing costs.
The average rate on a 15-year fixed-rate mortgage fell to a record low of almost 4.3 percent.
The Federal Reserve is pumping $1.25 trillion into mortgage-backed securities to try to bring down mortgage rates, but that money is set to run out next spring.
The goal of the program is to make home buying more affordable and prop up the housing market.
Buyers and homeowners who want to refinance are picking up their phones.
The Mortgage Bankers Association said mortgage applications rose 2 Percent last week.