More Borrowers Look to Shorten Their Loan Terms Last Quarter
According to Freddie Mac Quarterly Product Transition Report, released yesterday, more than 95% of refinance loans were fixed-rate mortgages. It is clear that refinancing borrowers are clearly taking advantage of the record low interest rates, preferring fixed-rate loans regardless of whether their original loan was or not.
"Fixed mortgage rates averaged well below long-term averages. It's no wonder we continue to see strong refinance activity into fixed-rate loan," Frank Nothaft, Freddie Mac's Vice President and Chief Economist stated. "For borrowers motivated to refinance by low fixed-rates, they could obtain even lower rates by shortening their term."
Borrowers already seem to be jumping on this trend, as an increasing share of refinancing borrowers chose to shorten their loan terms during the fourth quarter of 2011. Of borrowers who paid off a 30-year fixed-rate mortgage, 43% chose a 15- or 20-year loan, the highest since the first quarter of 2003.
If you're interested in shortening your loan terms, contact us at Guaranteed Rate to see what your options are.