Fixed Home Loans Most Popular Mortgage Refinancing Option
Homeowners looking to refinance their property in the second quarter were almost unanimously in favor of fixed-rate mortgages, according to the Quarterly Product Transition Report, which was released earlier in the week by Freddie Mac.
The report, which covered the second quarter of 2012, showed that over 95 percent of all homeowners opted for fixed-rate mortgages, as opposed to adjustable-rate mortgages or ARMs. And apparently, it didn’t matter whether the original mortgage was a fixed-rate loan or an ARM.
Also revealed in the survey were average fixed mortgage rates for both 30-year and 15-year loans for the second quarter of 2012. The Q2 2012 numbers showed 30-year fixed-rate mortgages average 3.79 percent and 15-year loans of the same type average 3.04 percent.
The averages represented the entire Q2 2012’s weekly Primary Mortgage Market Survey results, and according to Freddie Mac’s Vice President and Chief Economist Frank Nothaft, these are the lowest quarterly averages ever recorded. Rates, however, were up a third straight week in the most recent weekly mortgage rate survey – 30-year and 15-year fixed mortgages averaged 3.62 and 2.88 percent respectively.
In addition to analyzing the preference of fixed rate or ARM and the quarterly averages of each type of loan, the Freddie Mac report also revealed that 67 percent elected to stay on the same loan term when refinancing. 30 percent decided to have the loan term, or life of loan (LOL) reduced – this strategy, according to Nothaft, could be a potential way to reduce one’s rates through refinancing.