Freddie Mac says the rate for the popular refinancing option dropped to 3.54 percent from 3.66 percent the previous week. That's lowest average rate since the mortgage buyer began tracking it in 1991.
The average rate on the 30-year fixed loan fell to a yearly low of 4.39 percent from 4.55 percent the previous week.
Mortgage rates tend to track the yield on the 10-year Treasury note. A weakening U.S. economy has led many investors to shift money from stocks to bonds, which are seen as safer bets. That has pushed the yield on Treasurys to a yearly low.
Low mortgage rates have done little to revive the moribund housing market.