By Amy Hoak

Interest rates on fixed-rate mortgages dropped this week, according to Freddie Mac's weekly survey of conforming mortgages, released Thursday.

The benchmark 30-year fixed-rate mortgage averaged 5.16% for the week ending Feb. 12, down from 5.25% last week and 5.72% a year ago.

The 15-year fixed-rate mortgage also fell, averaging 4.81%, down from 4.92% last week and 5.25% a year ago.

"Interest rates for 30-year fixed-rate mortgages are almost 1.5 percentage points below 2008's peak set on July 24, 2008, offering many homeowners an incentive to refinance," Frank Nothaft, Freddie Mac vice president and chief economist, said in a news release. "This would translate into a monthly payment savings of around $188 on a $200,000 mortgage."

Rates on adjustable-rate mortgages were more stable. Five-year Treasury-indexed hybrid ARMs averaged 5.23%, down from last week's 5.26% average; they averaged 5.19% a year ago.

One-year Treasury-indexed ARMs averaged 4.94%, up from last week's 4.92%. They averaged 5.00% a year ago.

To obtain the rates, the fixed-rate mortgages required an average payment of 0.7 point, while the five-year ARM required an average 0.6 point, and the one-year ARM required an average 0.5 point. A point is 1% of the mortgage amount, charged as prepaid interest.

The low rates are prompting many homeowners to refinance their mortgages.

"The Bureau of Economic Analysis estimated that the weighted average mortgage rate of loans outstanding was about 6.2% in the fourth quarter of 2008," Nothaft said. "As a result, the share of refinancing among the total number of conventional mortgage applications has exceeded 50% for the past 11 weeks and averaged 80% over this period, according to the Mortgage Bankers Association."

Last week, however, refinance application volume fell by 30.3% from the previous week, according to the MBA's weekly survey.

-Amy Hoak; 415-439-6400; AskNewswires@dowjones.com