An increasing number of borrowers chose to shorten their mortgage term during the first quarter, according to Freddie Mac’s Quarterly Product Transition Report released today.
Of the borrowers who refinanced an existing 30-year fixed mortgage, 34 percent went with a 15- or 20-year fixed loan, the highest share since the first quarter of 2004.
Many homeowners were able to actually shorten their term and keep mortgage payments relatively similar because of the lower rate associated with these products, along with the fact that their starting rate was much higher prior to refinancing.
Meanwhile, 84 percent of borrowers who had a hybrid adjustable-rate mortgage chose to refinance into a fixed-rate loan program during the first quarter, continuing an ongoing pattern away from the uncertainty such products carry.
Overall, fixed-rate mortgages accounted for more than 95 percent of refinance loans, thanks largely to the ultra-low mortgage rates still on offer today.
That would also explain why the adjustable-rate mortgage share of the mortgage market has dwindled greatly over the years.
Most believe mortgage rates have nowhere to go but up, so many are locking in the historically low rates for the long haul, instead of taking advantage of the discount an ARM may offer at the moment.
Read more: 30-year fixed vs ARM.