Washington, D.C. - The mortgage rates in the United States tumbled and hit a new 37-year low led by the benchmark long-term mortgage rate, while the short-term mortgage rate remained mixed in the latest week, a report said.

Home funding company Freddie Mac said in a report Wednesday that its average rate on a 30-year fixed mortgage dropped for the ninth consecutive week to 5.10 percent for the week ending Dec. 31 with an average 0.7 point, down from 5.14 percent a week earlier.

"Interest rates for 30-year fixed-rate mortgages fell for the ninth straight week and represented a third consecutive all time record low since Freddie Mac's survey began in April 1971," Freddie Mac Vice President and Chief Economist Frank Nothaft said in a statement.

The 30-year fixed-rate mortgage average last year was at 6.07 percent. The 15-year fixed mortgage rate dropped to 4.83 percent in the latest week, compared to 4.91 percent. While, the one-year adjustable mortgage rates declined to 4.85 percent from 4.95 percent.

The world's largest economy has contracted in the line of expectation in the third quarter as the U.S. continues to struggle with the deepening recession.

In a latest data released by the Commerce Department, the reading on gross domestic product (GDP) contracted at an annual rate of 0.5 percent. GDP is a measure of the output of goods and services produced by labor and property located in the U.S. The market analysts are expecting the economic growth to further shrink by 4.3 percent in the on-going quarter.

"Since the end of October of this year, these rates have declined by about 1-1/3 percentage points, or payment savings of approximately $173 a month for a $200,000 loan," Nothaft was quoted as saying by MarketWatch report.

He added, "As a result, the number of refinance applications for conventional mortgages jumped over 500% between the weeks ending on Oct. 31st and Dec. 26th."

According to the S&P/Case-Shiller home-price indexes released yesterday, which is a closely watched measure of U.S. home prices, showed that home prices in October slipped at the fastest pace by 2.2 percent from September and as much as 18 percent drop from the prior year.

Home prices in all 20 major metropolitan areas have fallen compared with last month and a year ago. The report also noted that 14 of the 20 metro areas showed record rates of annual declines.

Meanwhile, the Federal Reserve in the U.S. has slashed its key benchmark interest rate from 4.75 percent registered in Sept. 2007 to its record low level in the range of 0.25 percent to zero. The regulating agency is now planning to purchase $500 billion worth of mortgage-backed securities to deal with the current recession and to revitalize money market.