Report: Consumers overwhelmingly select fixed-rate products when refinancing

More than 95 percent of refinanced loans in the fourth quarter of last year were for fixed-rate mortgages, according to mortgage records from Freddie Mac.

More than 95 percent of refinanced loans in the fourth quarter of last year were for fixed-rate mortgages, according to mortgage records from Freddie Mac.

Consistent loan rates appear to be leading many consumers to choose fixed-rate loans, the report found, as rates remain near record-low territory first reached back in October 2011.

"It's no wonder we continue to see strong refinance activity into fixed-rate loans," said Freddie Mac vice president and chief economist Frank Nothaft.

On top of selecting fixed loans, many borrowers who refinanced between October and December decided to shorten their loan period. More than 40 percent of those who refinanced their 30-year mortgages decided to change to 20- or 15-year options.

Also, nearly three in five borrowers with an adjustable-rate mortgage transitioned to a fixed product during the three-month period, while 42 percent of consumers with ARMs stayed with the loan type.

With the Federal Reserve holding interest rates low through 2014, as the agency recently announced it would, prospective borrowers will likely have a sufficient period to secure affordable loans.



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