BANKING & FINANCE - Jan. 5, 1996

30-Year Mortgage Rates Fall to 23-Month Low: Thirty-year mortgage rates dropped to 7.02% last week, from 7.11% the previous week, according to the Federal Home Loan Mortgage Corp. The rate is the lowest since Feb. 2, 1994. Mortgage rates have declined because U.S. bond yields have plunged since the start of 1995. The 10-year Treasury note recently yielded 5.55%, down from 7.82% at the end of 1994. This drop in yields has driven down mortgage rates, amid expectations that the economy isn’t growing fast enough to spur inflation. Meanwhile, the average adjustable mortgage rate fell to 5.46% from 5.55% a week earlier. Fifteen-year mortgage rates fell to 6.56%, down from 6.65% in the previous week, the agency reported.