Demand for 30-year fixed-rate loans rose sharply in the third quarter among borrowers who were refinancing their mortgages, Freddie Mac said.
According to the mortgage agency, 63% of refinancing borrowers with a 30-year loan stuck to it when they refinanced, up from 53% in the second quarter.
Among those with 15-year mortgages, 36% refinanced into the 30-year loan, up from 28% in the second quarter. And, among those with 1-year adjustable rate mortgages, 57% chose 30-year fixed rate loans, compared to 43% in the second quarter.
Freddie Mac attributed the increased popularity of the 30-year loan to higher interest rates in May, June and July. (Loans made during that period would likely have closed in the third quarter.)
The higher rates shifted demand from the other popular refinancing instrument - the 15-year fixed rate loan - to the 30-year loan.
Thus, only 22% of borrowers with 15-year loans refinanced into them, down from 33% in the third quarter, Freddie Mac said.
The agency's findings are based on a survey of borrowers whose original and refinanced loans were financed by Freddie Mac.