U.S. mortgage rates dropped to a record low in the latest week, as rates fell for a fifth straight week, a closely watched mortgage survey showed Thursday.

The lowest mortgage rates in decades and high affordability have helped the hard-hit housing market find some footing this year after a three-year slump.

Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 4.71 percent for the week ending December 3, down from the previous week's 4.78 percent, according to a survey by Freddie Mac

The previous week's rate had matched the prior record low set in April; Freddie Mac started the survey in 1971. A year ago, 30-year mortgage rates averaged 5.53 percent.

Mortgage rates are linked to yields on Treasuries and yields on mortgage-backed securities.

Cameron Findlay, chief economist at LendingTree.com in Charlotte, North Carolina, said mortgage rates will be sharply higher next year.

Findlay expects yields on 10-year Treasuries to be at about 3.84 percent by the second quarter of 2010, with a 180 basis point spread between mortgages and Treasuries. That would translate into a 5.64 percent 30-year fixed-rate mortgage.

Freddie Mac said the 15-year fixed-rate mortgage averaged 4.27 percent in the latest week, breaking the record low of 4.29 percent set the prior week. Freddie Mac started tracking the 15-year loan in 1991.

SUBDUED REACTION TO RATES

Consumers have shown a subdued reaction to low rates.

The Mortgage Bankers Association on Wednesday reported that U.S. mortgage applications nudged higher last week.

One-year adjustable-rate mortgages (ARMs), were 4.25 percent in the latest week, down from 4.35 percent the prior week, the lowest since an average rate of 4.24 percent in the week ended June 30, 2005, Freddie Mac said.

The rate on the 5/1 ARM, set at a fixed rate for five years and adjustable each following year, was 4.19 percent, compared with 4.18 percent a week earlier, Freddie Mac said. A year ago, 15-year mortgages averaged 5.77 percent, the one-year ARM 5.02 percent and the 5/1 ARM 5.77 percent.

Freddie Mac, like its larger sibling, Fannie Mae , is a mortgage finance company chartered by Congress that buys mortgages from lenders and packages them into securities to sell to investors or to hold in its own portfolio. Both companies were put into government conservatorship in September 2008.

(Editing by Leslie Adler)

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