After the Fed revealed plans to buy up more treasury securities, interest rates on long-term U.S. mortgage rates fell to their lowest average on record, according to mortgage giant Freddie Mac Thursday.

“The Federal Reserve’s announcement that it intends to purchase Treasury securities over the next six months caused bond yields to drop and mortgage rates followed,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Rates for 30-Yr FRMs peaked last year at 6.63 percent on July 24th. With this week’s 30-Yr FRM, the interest rate difference is almost 2 percentage points, which amounts to a savings of about $225 in monthly mortgage payments for a $200,000 loan.”

The average rate on a 30-year fixed rate mortgage (FRM) dropped to 4.85 percent, excluding fees, during the week ended March 26, 2009, from 4.98 percent the previous week. The rate has never been lower during the 38-year history of the weekly Freddie Mac survey. One year ago, the average rate was 5.85 percent.

Fifteen-year fixed rate loans carried an average rate of 4.58 percent, a decrease from 4.61 percent the week before. This is a new record low as well, the lowest on record since 1991 when Freddie Mac began collecting information on the 15-year FRM. Last year at the same time, the average rate was 5.34 percent.

Interest rates on one-year adjustable rate mortgages fell to 4.85 percent, down from 4.91 percent a week earlier. During the same week of 2008, the average rate was 5.24 percent.

The mortgage market is apparently responding well to the new, lower rates.“Potential homebuyers are taking notice of these historically low mortgage rates,” Nothaft commented. “Both new and existing home sales rose 5 percent in February. First-time homebuyers accounted for half of all existing home sales, according to the National Association of Realtors. In addition, mortgage applications for home purchases consecutively rose over the first three weeks in March, based on figures published by the Mortgage Bankers Association.”