Homeowners who refinance their mortgages are overwhelmingly
opting for fixed-rate loans, with only one in 20 choosing to go
with an adjustable-rate mortgage (ARM) instead, according to
Freddie Mac
.
Fixed-rate mortgages accounted for 95 percent refinanced
mortgages guaranteed by Freddie Mac during the second quarter of
the year, the secondary lender has announced. Over 80 percent of
borrowers with a hybrid ARM chose to refinance into a fixed-rate
mortgage, while the remainder chose to stay with an ARM for their
new loan.
Of the borrowers who refinanced, 30 percent chose to shorten
their loan term, while two-thirds stayed with the same loan
duration as before. A small number opted to lengthen their loan
term.
HARP refis choose longer terms
Borrowers who refinanced through the Home Affordable
Modification Program (HARP) were slightly less likely to shorten
their loan terms, with 25 percent of HARP borrowers choosing a
shorter mortgage compared to 30 percent of non-HARP refinances.
About one-third of borrowers in 30-year mortgages chose to
refinance into a shorter loan product, with 21 percent choosing a
15-year fixed-rate mortgage and 12 percent choosing a 20-year
fixed-rate loan.
Some stay with ARMs
The one group where ARMs remained relatively popular were
borrowers who already had that type of loan and were not
refinancing through HARP. According to Freddie Mac, about half of
those homeowners opted for another ARM. By contrast, only 5 percent
of those with an ARM who refinanced through HARP chose another ARM
for their new loan type.
Overall, only 1 percent of borrowers with a fixed-rate mortgage
chose to refinance into an ARM, although the figure rose to 2
percent for borrowers refinancing a 15-year fixed-rate
mortgage.
Average interest rates on fixed-rate mortgages during the second
quarter of the year were 3.74 percent on 30-year loans and 3.04
percent on 15-year mortgages, according to Freddie Mac figures.
All figures are based on mortgages where Freddie Mac has funded
at least two successive loans and the most recent loan was a
refinance.
First published on MortgageLoan.com at:
http://www.mortgageloan.com/fixed-rate-loans-dominate-refinancing-9209