NEW YORK (CNN/Money) - Mortgage rates continued to drift lower this week as ongoing tensions between the U.S. and Iraq pressured interest rates and the one-year adjustable mortgage held at a record low.

For the week ending Feb. 7, the one-year adjustable rate mortgage (ARM), loosely indexed to the 10-year Treasury note, remained at its lowest level since Freddie Mac began tracking it in 1984. It averaged 3.89 percent, with an average 0.7 point payable up front, unchanged from last week. Last year at this time, the 1-year ARM averaged 5.04 percent.

The 30-year fixed-rate mortgage (FRM) averaged 5.88 percent, down from 5.90 percent the prior week and well below the 6.88 percent average in place a year ago. An average 0.7 point was payable up front to the lender.

Meanwhile, the 15-year fixed-rate mortgage averaged 5.27 percent, with an average 0.6 point payable up front, down from last week's average of 5.28 percent. A year ago, the 15-year FRM averaged 6.36 percent.

"Mortgage rates are in a holding pattern right now as the country tries to smooth out the knots in the economy. Low rates are a real boost to an already thriving housing market," said Freddie Mac chief economist Frank Nothaft in a statement. "Over the last few months, the number of mortgage applications for home purchase has averaged near record levels...which suggests no immediate slowdown in housing anytime soon."

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Freddie Mac (FRE: up $0.18 to $54.88, Research, Estimates), or Federal Home Loan Mortgage Corp., is a publicly traded company the government established in 1970 to provide a flow of funds to mortgage lenders. It buys mortgages from banks, bundles them and then resells them as mortgage-backed securities.

Its products, and the products of other similar entities, have become increasingly popular as an alternative to government-backed bonds, particularly with international investors.