The rate on the 30-year mortgage dropped this week to 3.40 percent, a new record low. That's down from last week's rate of 3.49 percent, which matched the lowest since long-term mortgages began in the 1950s.

The average on the 15-year fixed mortgage fell to 2.73 percent, down from the record low of 2.77 percent last week, according to Freddie Mac.

This comes on the heels of news that home prices are stabilizing, but many homeowners still have a hard time qualifying for loans, preventing them from taking advantage of the rock bottom rates.

Fourty percent of all refinancing applications fall apart, according to the Mortgage Bankers Association. Among the main reasons is that borrowers do not qualify for new loans because of credit scores or income.

Earlier this month the Federal Reserve said it would spend $40 billion a month to buy mortgage-backed securities. The goal is to further lower mortgage rates, help the housing recovery and boost spending.