In the second quarter of 2011, fixed-rate loans accounted for about 95 percent of refinance loans, based on the Freddie Mac Quarterly Product Transition Report. Refinancing borrowers preferred fixed-rate loans, regardless of whether their original loan was an adjustable-rate mortgage (ARM) or a fixed-rate, the report concluded.
An increasing share of refinancing borrowers chose to shorten their loan terms during the second quarter, according to Freddie Mac. Of borrowers who paid off a 30-year fixed-rate loan, 37 percent chose a 15- or 20-year loan, the highest such share since the third quarter of 2003.
The report indicated 55 percent of borrowers who had a hybrid ARM chose a fixed-rate loan during the second quarter, while the remaining 45 percent chose to refinance into the same type of product. The share refinancing from hybrid ARM to hybrid ARM was the highest since the second quarter of 2004.