Home Loan Refinancing
In a Freddie Mac Quarterly Product Transition Report just released, nearly 30 percent of refinancing borrowers shorten mortgage terms in Q3
In the third quarter of 2012, 29 percent of borrowers who refinanced an existing mortgage chose to shorten their loan term. Refinancing borrowers also preferred fixed-rate loans, regardless of whether their original loan was an adjustable-rate mortgage (ARM) or a fixed-rate, according to the report.
More than 95 percent of refinancing borrowers chose a fixed-rate loan. Eighty-two percent of borrowers who had a hybrid ARM chose a fixed-rate loan during the third quarter, the highest share since the second quarter of 2010, while the remaining 18 percent chose to refinance back into a hybrid ARM.
Those borrowers who refinanced under the Home Affordable Refinance Program (HARP) were more likely to take out a long-term, fixed-rate mortgage. One quarter of HARP borrowers shortened their loan term when they refinanced during the third quarter, compared with 31 percent of borrowers who refinanced outside of HARP.
