Freddie Mac said that the average rate for 30-year, fixed-rate mortgages fell below 7%, to its lowest level since February 1996, in the week ended Dec. 26.

Lower rates suggest a favorable environment for consumers who want to reduce borrowing costs by refinancing their loans.

The 30-year mortgage averaged 6.99% in the Dec. 26 week. In February 1996, the comparable rate was 6.94%.

The average for 15-year, fixed-rate mortgages fell to 6.57%, also its lowest since February 1996, when it averaged 6.44%.

The Mortgage Bankers Association's seasonally adjusted refinancing index rose to 850.0, up from 827.3 during the previous week and 360.4 for the week ended Dec. 19, 1996. Refinancing activity was 47.3% of total applications, an increase of three percentage points from the previous week.

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