WASHINGTON (AP) _ Homeowners are taking advantage of falling mortgage rates to create the second refinancing boom of the 1990s.

Frank Nothaft, deputy chief economist for the Federal Home Loan Mortgage Corp., said Wednesday that refinance activity is approaching the levels seen during the 1992-93 boom.

That one peaked in October 1993, when refinancing comprised nearly 75 percent of mortgage activity.

Nothaft said his company expects the cost of 30-year fixed-rate mortgages to remain low in 1996, averaging just 7.3 percent.

Refinance activity dropped to just 10 percent of the mortgage market in January 1995 as rising mortgage rates made refinancing less desirable.

After sinking to a 25-year low of 6.74 percent in October 1993, 30-year fixed-rate mortgages shot up to 9.25 percent at the end of 1995, according to weekly surveys by the company, known as Freddie Mac.

The monthly payment on a $100,000 mortgage with a 7 percent interest rate is $665, while the payment on the same loan with a 9 percent rate is $805.

As the economy slowed last year, long-term interest rates began falling sharply. Freddie Mac reported last week the 30-year loans averaged 6.94 percent.