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Borrowers who refinanced in the first quarter of 2010 overwhelmingly chose fixed-rate loans, regardless of[IMAGE]
whether their original loan was an adjustable-rate mortgage (ARM) or fixed-rate, ""Freddie Mac"":http://www.freddiemac.com/ reported Wednesday.
In fact, according to Freddie Mac's quarterly ""Product Transition Report"":http://www.freddiemac.com/news/archives/corporate/2010/20100512_product_transition.html, fixed-rate loans accounted for more than 95 percent of refinance loans during the quarter. While 30-year fixed-rate mortgages were still the most preferred product chosen, 15-year fixed-rate mortgages gained favor among refinancer who previously held 30-
[COLUMN_BREAK]year fixed-rate mortgages, balloon mortgages, and ARMs, Freddie Mac said.
""With fixed-rate interest rates near a generational low and initial interest rates on hybrid ARMs close to fixed-rate levels, large numbers of homeowners have chosen fixed-rate loans for refinance,"" said Frank Nothaft, VP and chief economist for Freddie Mac.
Nothaft said homeowners are choosing the comfort that comes with constant monthly principal and interest payments on fixed-rate mortgages. And at the same time, many borrowers are looking at paying down their mortgage balances faster by choosing a shorter mortgage term of 15 or 20 years instead of 30 years, he said.
During the first quarter, 25 percent of borrowers who had 30-year fixed-rate loans refinanced into a 15- or 20-year fixed-rate loan. Nothaft said this is the largest percentage of borrowers who have shortened their term since the third quarter of 2004, when about 30 percent of borrowers who had a 30-year fixed-rate loan opted for a shorter-term fixed-rate loan or balloon note.
Freddie Mac said its estimates come from a sample of properties on which it has funded at least two successive loans and the latest loan is for refinance rather than for home purchase.
