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by CareyBot

The tight spread between interest rates on fixed- and adjustable-rate mortgages means more than eight out of 10 borrowers refinancing out of 1-year or hybrid ARMs are choosing fixed-rate mortgages, Freddie Mac reports. In the first quarter of 2007, 89 percent of borrowers who originally had a 1-year adjustable-rate mortgage chose a fixed-rate mortgage when they refinanced, compared with 85 percent in the same quarter a year ago. About 84 percent of borrowers who initially had a hybrid ARM refinanced into 15-, 20- or 30-year fixed-rate loans, up from 76 percent a year ago. Hybrid ARMs carry fixed interest rates for a predetermined period, usually five years, and then adjust every year. "Mortgage rates on 30-year fixed-rate loans averaged 6.2 percent in the first quarter, while ra...