Home loan rates set new lows in the latest week on more evidence of a soft U.S. economy and high unemployment, home funding company Freddie Mac said on Thursday.

The average 30-year mortgage rate fell to 4.44 percent in the week ended August 12, the lowest since Freddie Mac records began in 1971. The prior record low was 4.49 percent a week ago, which was well below 5.29 percent a year ago.

Record low mortgage rates have lifted demand to refinance loans and buy homes. But the pace has nonetheless been tepid with unemployment flirting with 10 percent, consumer confidence dim and lending standards restrictive.

The refi applications index remains at least 40 percent below the peak seen last year.

Fifteen-year mortgage rates dropped 0.03 percentage point to average 3.92 percent, the lowest since records began in 1991. And five-year Treasury-indexed adjustable-rate mortgages (ARMs) at 3.56 percent also set a record low, dating back to 2005.

Interest rates for fixed mortgages and five-year hybrid ARMs again broke record lows this week following reports of a sluggish job market, Frank Nothaft, chief economist at Freddie Mac said in a statement.

The Federal Reserve this week downgraded its outlook for economic growth and initiated steps to keep interest rates low to help stimulate the economy.

Whether on-the-fence homebuyers and potential refinancers will soon take advantage of the historic opportunities presented by the lowest mortgage rates in five decades remains to be seen, but we're not counting on a change anytime soon, Freddie Mac said on Wednesday in a separate report.

JPMorgan estimates that every 1/8 percentage point drop in 30-year mortgages from here would entice refinancing on an added $200 billion in conventional mortgages, assuming at least 1/2 percentage point in rate savings for qualified borrowers.

Ninety-five percent of borrowers who did refinance in the second quarter chose fixed-rate loans, Freddie Mac said. With all rates low, though, more homeowners shifted to shorter-term fixed loans.

The 30 percent share of borrowers refinancing a 30-year loan and taking out a 15- and 20-year mortgage in the second quarter was the highest since 2004.

If the borrower had a 30-year 6.5 percent loan with a $200,000 principal balance, they could save about $250 a month at the new lower 30-year rate. For about the same monthly payment as their old loan, Freddie Mac said, they could shave about $70,000 in interest over the life of the loan with a shorter 20-year mortgage.

(Editing by Chizu Nomiyama)