Lenders have seen an upswing in refinance activity for 30-year fixed-rate mortgages. It's a trend that may signify a change of direction for the industry, which had seen a steady two-year rise in refi activity for its 15-year cousin.
A Freddie Mac survey that studied the loans homeowners chose when refinancing showed that 53% of borrowers refinancing 30-year-fixed-rate mortgages in the third quarter. It marks the first time that 30-year loans were the majority choice since the third quarter of 1991, when it was 52%. The Freddie survey was based on mortgages where Freddie bought both the original and refinanced loan.
But while the statistics show a mild 5% increase, Freddie Mae's chief economist, Robert Van Order, said that with the survey's margin of error of 3%. a 2% increase is probably a more realistic barometer. "Although low 30-year mortgage rates in the third quarter helped increase the demand for 30-year loans by borrowers, shorter maturity loans remain very popular and should remain so for the rest of the year.