DOW JONES NEWSWIRES
Borrowers refinancing their mortgages overwhelmingly chose
fixed-rate loans in the second quarter, according to Freddie Mac
(FRE).
Refinancings have surged in recent months amid lower interest
rates and as the credit market slowly unfreezes.
Freddie said Thursday that 99% of prime borrowers who originally
had a conforming adjustable-rate mortgage chose a fixed-rate
mortgage when they refinanced, up slightly from 98% in the first
quarter.
The company said that, although 30-year fixed-rate mortgages
tended to be preferred, 15-year fixed-rate mortgages were gaining
favor.
"Both refinancing borrowers and families buying homes are shying
away from ARMs in the current environment," Freddie Mac Chief
Economist Frank Nothaft said.
Freddie said two weeks ago that half of all borrowers who
refinanced their mortgages in the quarter saw their interest rate
drop at least 20%, saving them some $3.4 billion the next year.
-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353;
kerry.benn@dowjones.com