Fixed rate loans dominating
According to Freddie Mac’s Quarterly Product Transition Report, in the third quarter of 2011, more than 95 percent of refinance loans were fixed rate loans regardless of whether a borrower’s original loan was fixed rate or adjustable.
Freddie Mac reports that a rising percentage or borrowers that are refinancing are choosing to shorten their loan terms and out of all borrowers who paid off a 30-year fixed rate loan, nearly half chose a 15 or 20 year loan, the highest such share in over eight years.
A little over six in ten borrowers who had a hybrid ARM chose a fixed-rate loan last quarter wit the remaining share choosing to refinance into the same type of product they already had.
Frank Nothaft, Freddie Mac vice president and chief economist said, “The extension to the end of 2013 and additional enhancements to the Home Affordable Refinance Program, announced on October 24, provide opportunities to eligible borrowers who had not yet refinanced. More than 900,000 borrowers have already refinanced via the Program through September. The enhancements provide incentives for eligible borrowers to shorten their loan terms, from 30 years to 20- or 15-years.”