Homeowners who refinanced their mortgages in the first quarter cut their average interest rate by almost two percentage points and reduced their loan terms by an average of four years, according to the Federal National Mortgage Association.

Last year, borrowers saved some $16 billion on their mortgage payments, the Mortgage Bankers Association estimated. The group is expecting a further reduction of $7 billion this year.

New information for May also showed that the flow of adjustable-rate mortgages into the secondary market declined to the lowest level in many years, accounting for just 2.8% of Fannie Mae's purchases. In January 1991, 10% of the company's purchases were adjustable loans.

However, a relatively small percentage of adjustables find their way to the investment market. Portfolio lenders such as thrifts are major adjustable-rate lenders and prefer holding the loans to selling them.

Fannie Mae's numbers also showed that intermediate-term mortgages, such as 15-year loans, accounted for one-third of its business. Overall, 30-year fixed-rate loans represented 54.6% of the company's loan volume.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.