Refinancing Borrowers Pick Shorter Term Loans

Freddie Mac

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Refinancing Borrowers Overwhelming Pick Shorter Term Loans
Feb 15 2012, 10:34AM

More borrowers chose shorter term loans in Quarter Four.  Forty-three percent of borrowers who refinanced a 30-year FRM chose a 15 or 20 year variety, the highest percentage on record, and 77 percent with a 20-year traded it in for a 15 year.  Only about 19 percent of fixed-rate borrowers picked longer-term loans when refinancing.

Fourth Quarter Refinance Transition Figures

Old Loan

1-Year ARM

Hybrid ARM

Balloon

15-Year FRM

20-Year FRM

30-Year FRM

1-Year ARM

0%

36%

0%

43%

14%

7%

Hybrid ARM

0%

42%

0%

11%

3%

44%

Balloon

0%

5%

0%

28%

13%

55%

15-Year FRM

0%

1%

0%

91%

1%

6%

20-Year FRM

0%

1%

0%

77%

11%

12%

30-Year FRM

0%

1%

0%

27%

16%

56%

Frank Nothaft, Freddie Mac vice president and chief economist said “For borrowers motivated to refinance by low fixed-rates, they could obtain even lower rates by shortening their term. Compared to a 30-year fixed-rate mortgage, the interest rate on 15-year fixed was about 0.7 percentage points lower during the fourth quarter.  And for borrowers who plan to remain in their current home for only a few years, the hybrid ARM allows for even a greater interest-rate savings. The initial interest rate on a 5/1 hybrid ARM was about 1.1 percentage points lower than on a 30-year fixed-rate loan.”

Read the Full article here:

http://www.mortgagenewsdaily.com/02152012_refinancing.asp

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About Garry Callis - Legacy Real Estate Group - Colorado

Awesome Colorado Realtor! Check me out at www.legacyrealtor.net

Posted on February 16, 2012, in Market Conditions and tagged , , , , , , , . Bookmark the permalink. Leave a comment.

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