Freddie Mac More than 95 of Q3 Refinancers Choose FixedRate Loans

first_imgrefinance,Freddie Mac: More than 95% of Q3 Refinancers Choose Fixed-Rate Loans in Data, Origination Adjustable-Rate Mortgage Agents & Brokers Attorneys & Title Companies Fixed-Rate Mortgage Freddie Mac Investors Lenders & Servicers Mortgage Rates Refinance Service Providers 2012-11-15 Esther Cho Sharecenter_img In the third quarter of this year, 29 percent of borrowers who refinanced opted for a shorter loan term, while only 3 percent chose a mortgage with a longer term, according to data from “”Freddie Mac””: Most borrowers–68 percent–decided to maintain the same term on their loan.[IMAGE][COLUMN_BREAK]Freddie Mac also reported more than 95 percent of refinancers selected a fixed-rate loan. Eighty-two percent of borrowers who started with a hybrid ARM decided to go with a fixed-rate mortgage. The figure is the highest share since the second quarter of 2010. For those who began with a 1-year ARM, 81 percent transitioned into a fixed-rate loan. Home Affordable Refinance Program (HARP) refinancers were more likely to go with a longer-term mortgage, with 25 percent of HARP refinancers shortening their loan term compared to 31 percent of non-HARP refinancers. In a release, Frank Nothaft, Freddie Mac VP and chief economist, explained the benefits of shorter-term mortgages. “”Compared to a 30-year fixed-rate mortgage, the interest rate on a 15-year fixed was about 0.7 percentage points lower during the third quarter,”” Nothaft said. “”For borrowers motivated to refinance by low fixed-rates, they could obtain even lower rates by shortening their term. Further, a shorter-term, fully amortizing loan reduces the loan balance faster and builds home equity sooner.”” November 15, 2012 431 Views last_img read more