Freddie Mac: Refinancing borrowers big fans of fixed-rate mortgages
Refinancing borrowers "overwhelmingly" moved into 30-year fixed-rate mortgages in the third quarter, according to a Freddie Mac product report. Freddie said 15-year and 20-year FRMs also have grown in popularity in recent quarters. Overall, more than 95% of refinanced loans moved into FRMs. Throughout the third quarter, the 30-year FRM rate dropped to just over 4.25%, levels that have not been seen since the 1950's. For the week ending Nov. 11, the 30-year FRM reached 4.17%, a new record low. "It's no wonder borrowers are attracted to fixed-rate loans," Freddie Mac Chief Economist Frank Nothaft said. Nothaft said more borrowers are shortening their amoritization terms. While there is a discount for shorter terms, monthly payments are about 50% higher than the 30-year, but with rates so low, shorter terms are becoming more popular. "What we're seeing now is that the level of the 15-year payment is becoming more affordable to more borrowers," Nothaft said. Write to Jon Prior.