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According to mortgage giant Freddie Mac, more than 95 percent of homeowners who chose to refinance in the third quarter (Q3) of 2011 opted for fixed-rate mortgages.
Freddie Mac’s Quarterly Product Transition Report released today showed that those refinancing mortgages had a clear bias for fixed-rate mortgages, regardless of whether the original mortgage loan was a fixed-rate mortgage (FRM) or an adjustable-rate mortgage (ARM).
“Fixed mortgage rates averaged 4.29 percent for 30-year loans and 3.47 percent for 15-year product during the third quarter in Freddie Mac’s Primary Mortgage Market Survey®, well below long-term averages,” Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement. “The Bureau of Economic Analysis has estimated the average coupon on single-family loans was about 5.3 percent during the third quarter of 2011. It’s no wonder we continue to see strong refinance activity into fixed-rate loans.”
According to Freddie Mac’s data, more refinancers opted for a shorter-term loan during the second quarter (Q2) of 2011 than in any quarter since the second quarter (Q2) of 2003. Of refinancing homeowners who restructured a 30-year fixed-rate mortgage, 40 percent chose either a 15-year or 20-year mortgage.
Separate data from the Mortgage Bankers Association (MBA) found that more than half (50.6 percent) of refinance borrowers in October 2011 chose 30-year fixed-rate mortgages. 15-year fixed-rate mortgages accounted for 28.8 percent of refinance activity in October 2011, the MBA said, which is the second highest level since January 2011.
“Compared to a 30-year fixed-rate mortgage, the interest rate on 15-year fixed was about 0.8 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.”
courtesy of: Max Thompson at http://www.e-wisdom.com
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