NEW YORK — This week's surprise rate cut by the Federal Reserve not only held Wall Street and investors in thrall, it's also kicked into high gear a rush by homeowners across the country to refinance their mortgages at today's lower rates.

Current rates on thirty-year fixed-rate mortgages now carry an average interest rate of 5.48 percent, down from 5.69 percent last week and from 6.32 percent a year ago, according to a Bankrate.com national survey. That's bringing them within shouting distance of the historic low of 5.21 percent set in June 2003, when the housing sector was expanding quickly and there was a stampede of mortgage refinancings.

The Fed's unexpected reduction of the overnight bank lending rate by three-quarters of a point to 3.5 percent this week doesn't necessarily mean mortgage rates will drop by a similar amount. Mortgage lenders tend to peg their rates instead to the yield on the 1-year Treasury note or 3-month London Interbank Offered rates.

However, the Fed's cut was a response to worrisome economic and credit market developments that have been pushing mortgage rates lower in recent months. And it seems to have set off a light bulb above the heads of many homeowners.

The Mortgage Bankers Association said refinancings last week reached their highest levels since April 2004. The trade group's Market Composite Index, a measure of mortgage loan application volume, rose 8.3 percent from the previous week's level.