The once popular adjustable-rate mortgage has fallen out of favor with borrowers, and more homeowners are working faster to whittle down their mortgage debt.
According to a quarterly report from Freddie Mac on refinancing activity, fixed-rate loans are overwhelmingly preferred by borrowers, with 95 percent of all such deals being for a fixed-rate product.
“The lowest fixed-interest rates in more than a generation, coupled with the comfort that a constant monthly principal and interest payment provides the homeowner, are important drivers in fixed-rate product choice,” saId Frank Nothaft, chief economist for Freddie Mac, in a statement.
A 30-year fixed-rate mortgage was the most popular refinance choice in the fourth quarter. However, 15-year fixed-rate mortgages also attracted more borrowers seeking shorter terms to pay down their mortgage balance faster.
The average rate on a 30-year fixed-rate mortgage dropped to 4.97 percent in the week ending Feb. 11, down from 5.01 percent a week earlier.
A year ago, 30-year mortgages averaged 5.16 percent, Freddie Mac notes.
Low rates are attracting more homeowners than buyers. Since the start of the year, two out of three mortgage applications have been to refinance an existing mortgage, according to the Mortgage Bankers Association.
Low rates also are helping to boost sales. The National Association of Realtors says sales of existing homes in the United States rose 14 percent in the fourth quarter.
Homes sales across Greater Baltimore continued to improve in January, rising 9 percent, according to Rockville-based Metropolitan Regional Information Systems Inc.
The median sale price, however, declined 2.2 percent compared with the same month last year, according to the market research firm.
The average home sold for $225,000 in January, compared with $230,000 during the period last year.
In January, 1,103 homes were sold in Greater Baltimore — Baltimore City, Anne Arundel County, Baltimore County, Carroll County, Harford County and Howard County. That’s up from 1,015 during January 2009.
Nick Gioia | www.NGRealtyGroup.com