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Number of ARM borrowers refinancing into another ARM rises

But majority still switched to fixed-rate mortgages in Q2, report finds

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Although they remained a distinct minority, more borrowers looking to refinance their adjustable-rate mortgages during the second quarter went with another ARM loan instead of a fixed-rate mortgage, Freddie Mac reports. About 4 percent of borrowers with 1-year ARMs stayed with that product when they refinanced during the second quarter, compared with 1 percent in the first quarter and 2 percent a year ago, Freddie Mac said. Another 10 percent of 1-year ARM borrowers went with hybrid ARMs when they refinanced during the second quarter, compared with 8 percent in the first quarter. Mortgage rates on 30-year fixed-rate loans went up in the second quarter to 6.4 percent, while rates on 1-year Treasury-indexed ARMs were 5.5 percent, said Amy Crews Cutts, deputy chief economist for Freddie Mac. "While most borrowers still prefer to refinance into fixed-rate mortgage products, the widening spread between fixed- and adjustable-rate mortgages in the second quarter made ARMs a bit m...