Rates on 30-year fixed rate mortgages dropped below 5 percent last week and continued to fall this week, creating a dramatic stir in refinancing.

According to mortgage finance company Freddie Mac, the average rate on a 30-year FRM sank to 4.87 percent, excluding points, during the week ending Thursday, down from 4.94 percent. The 15-year FRM rate also dropped, falling to 4.33 percent from 4.36 percent, and the one-year adjustable rate mortgage averaged 4.53 percent, up from 4.49 percent.

There seems to be something special about long-term rates under 5 percent, as refinance activity has surged up 38 percent during the three weeks ending October 2 when rates were below that threshold. The same thing happened in May when rates were under 5 percent for several weeks. Some estimate that refinance requests rose by as much as 30 percent at that time.

It must be something about hearing that rates are near “record lows” that stirs homeowners to take the initiative to refinance into better loan terms and lower monthly payments.

“The wave of homeowners taking advantage of low rates by refinancing is a smart move on the individual level, and it’s possible these refinances could help the housing market in the long term,” said Stan Humphries, chief economist at Zillow.com, based in Seattle, Washington as quoted in a Reuters article. “If homeowners are getting out of risky mortgage products and into more traditional products, that could help stem future foreclosures marginally.”

The rates are still only helpful for those who qualify for refinances, and approximately one in four homeowners today are underwater in their mortgages, often keeping them from taking advantage of the falling rates.

Home purchases do not seem to be as affected by the drop in rates, as they only rose 13.2 percent in the latest week according to the Mortgage Bankers Association.