BANKING & FINANCE - Dec. 29, 1995

Mortgage Rates Drop: Mortgage rates fell this week to their lowest levels in nearly two years amid signs of a weakening economy and slipping consumer confidence, the Federal Home Loan Mortgage Corp. said. Thirty-year, fixed-rate mortgages averaged 7.11% in the week ended Dec. 29, down from 7.23% last week, and rates on 15-year loans slid to 6.65% from 6.73%. The rates were the lowest since the week ended Feb. 18, 1994, when the 30-year loan averaged 7.11% and the 15-year loan was 6.64%, Freddie Mac said. One-year, adjustable-rate loans averaged 5.55%, down from 5.64% last week. Lower mortgage rates will make for an active housing market over winter, normally the slowest period for the housing industry, said Frank Nothaft, Freddie Mac deputy chief economist.