It might not be a new fashion trend, but Freddie Mac has issued a press release on August 11, 2008 stating:
"in the second quarter of 2008, 97 percent of prime borrowers who originally had a 1-year conforming adjustable-rate mortgage (ARM) chose a new conforming fixed-rate mortgage when they refinanced and 87 percent of prime borrowers that initially had a conforming hybrid ARM refinanced into a conforming fixed-rate loan as well."
It's as though borrowers are saying that the phrase "Keep is simple, stupid" applies to mortgage products as well as anything else. It may also point to the functionality of the free-market economy. With the likely perception that adjustable rate products have contributed to the current foreclosure landslide burying the financial industry, borrowers appear to view ARMs as anathema.
The predictable trumps the unpredictable. A recent trend fades away and fixed rates are back in black!
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