Borrowers refinancing adjustable-rate mortgages during the third quarter were a little less likely to move into fixed-rate loans, mortgage repurchaser Freddie Mac said today.
About 85 percent of borrowers refinancing 1-year ARM loans chose fixed-rate mortgages, Freddie Mac reported, down slightly from 86 percent in the second quarter.
About 82 percent of borrowers refinancing hybrid ARM loans during the third quarter chose fixed-rate loans, off from 85 percent during the second quarter.
The estimates come from a sample of properties for which Freddie Mac has funded at least two successive loans.
Freddie Mac’s Refinance Product Transition Report revealed that 58 percent of borrowers refinancing 15-year fixed-rate loans during the third quarter switched to a 30-year fixed-rate mortgage — the highest percentage since Freddie Mac began tracking the statistic in 2002.
By contrast, 53 percent of borrowers refinancing 15-year fixed-rate loans in the second quarter moved into 30-year mortgages, and only 8 percent made such a move in the third quarter of 2002.
“Mortgage rates on 30-year fixed-rate conventional conforming loans became more favorable during the third quarter after topping out at 6.7 percent in July,” said Amy Crews Cutts, deputy chief economist for Freddie Mac, in a statement. “Average 30-year fixed rates in September were 0.32 percentage points lower than the average rates in July … and the difference between fixed and adjustable rates narrowed through August and most of September.”
Borrowers refinancing a 1-year ARM during the third quarter stayed with that product 5 percent of the time, compared with 4 percent of the time in the second quarter and 2 percent a year ago.
About 10 percent of 1-year ARM borrowers switched into a hybrid ARM product when refinancing in the third quarter, down from 12 percent in the third quarter of 2006.
Borrowers who originally had a balloon mortgage were less likely to switch into a 30-year fixed loan than in the second quarter, and the percentage of borrowers originally holding 30-year fixed-rate mortgages refinancing back into the same product stayed unchanged from the previous quarter.