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June 22, 2011

Popularity Of Fixed-Rate Loans Evident In 1st Quarter Refinance Shares
According to mortgage giant Freddie Mac's Quarterly Product Transitions Report, 95 percent of all refinance mortgages in the first quarter were fixed-rate loans. Homeowners refinancing to take advantage of lower interest rates overwhelmingly shoes the fixed-rate option over the adjustable-rate path, regardless of which type their original loan was.

Meanwhile, an increasing percentage of refinancing borrowers elected to shorten the terms of their loans during the quarter. Of refinancers borrowing to pay off a 30-year loan, 34 percent opted for a shorter 15 or 20 year term, the highest such share reported since the first quarter of 2004.

84 percent of borrowers who refinanced a hybrid ARM loan opted to switch to a fixed-rate product, according to Freddie Mac's report. This preference of fixed-rate loans over ARMs is not new, however, as borrower preference has been trending in that direction for several years.

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