Freddie Mac reported a continuing drop in fixed-rate mortgages with the 5-year-adjustable mortgage rate falling to a new low. "Low rates are helping to heal many battered local housing markets by increasing home-purchase activity," said Frank Nothaft, Freddie Mac's vice president and chief economist. He noted that reports of a faltering economy helped push rates to record lows. The situation is also spurring refinancing, lenders say.

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