The Fed's decision to focus on consumer credit availability appears to be just the right medicine. Mortgage applications for the week ending November 28 soared a record 112.1%, to 857.7, the highest since the week ended March 21, according to the Mortgage Bankers Association (MBA).

Thanks to the Fed's decision to buy up to $500 billion of mortgage securities backed by Fannie Mae, Freddie Mac and Ginnie Mae, 30-year mortgage rates dropped 0.52% to an average of 5.47%, excluding costs. That was the largest drop since 1990 when the MBA started this survey.

Clearly the Fed's plan to help out consumers by freeing up the credit market is working much better than the Treasury Department's plan to help out the banks. Instead of lending, the banks are hoarding their newfound cash, or buying up other banks.

Mortgage interest rates are now at their lowest level since June 24, 2005, when they were in the same range as today. The refinance share of applications increased to 69% from 49% in the previous week.

Hopefully, these new rates will help folks stuck with un-affordable adjustable rates lock in something they can afford. That could help to stem foreclosures. Only 1.4% of new loans were adjustable-rate mortgages. Their death will not be mourned.

If you can afford the payments on a 15-year mortgage, you can get an even better deal. Rates for 15-year mortgages dropped to 5.13%, down from 5.78% the previous week.

Lita Epstein has written more than 25 books including the "Complete Idiot's Guide to Improving Your Credit Score" and "The 250 Questions You Should Ask About Buying Foreclosures."