WASHINGTON (AP) _ Mortgage rates fell this week to the lowest level in 20 months in a side effect of the seesawing stock market.

The decline in the average rate on 30-year fixed-rate mortgages to 7.21 percent from 7.35 percent a week earlier brought the average to its lowest level since the week ended Feb. 15, 1996, Freddie Mac, the mortgage company, said Thursday. It was the biggest drop in six weeks.

Mortgage rates this week keyed off the U.S. Treasury securities market, where rates fell as investors snapped up bonds in a ``flight to quality.''

Before stock market turmoil spread around the world from Southeast Asia, economists were predicting mortgage rates would drift up this year.

Thirty-year mortgage rates hit a peak for the year so far of 8.18 percent in early April, after the Federal Reserve last tightened monetary policy.

Fifteen-year mortgages, a popular option for refinancing, averaged 6.76 percent this week, down from 6.90 percent and also the lowest since February 1996.

On one-year adjustable-rate mortgages, lenders were asking an average initial rate of 5.46 percent, down from 5.55 percent and the lowest in eight months.

The rates do not include add-on fees known as points.