Freddie Mac released a new quarterly survey last week called Refinance Product Transition Report. The new survey tracks what types of loans borrowers are refinancing out of and moving back into.

The GSE said it plans to release this report on a quarterly basis along with its Cash-Out Refinance Report. Data for this report comes from a sample of properties on which Freddie Mac has funded at least two successive loans. Transactions are further screened to verify that the latest loan is for refinance rather than for home purchase, the agency said.

The report confirmed that more homeowners are choosing to refinance into fixed rate mortgage loans. The GSE reported that in 1Q07, 56% of borrowers who originally had a one-year ARM refinanced into a 30-year fixed rate mortgage, 21% refinanced into a 15-year fixed rate, and 12% into a 20-year fixed rate for a total of 89%. Just 9% refinanced back into a one-year ARM (2%) or hybrid ARM (7%). In 4Q06, 88% of borrowers that had a one-year ARM refinanced into a fixed rate mortgage.

Of those borrowers that originally had a hybrid ARM, 67% chose a 30-year fixed rate mortgage, 11% chose a 20-year fixed rate, and 6% a 15-year fixed rate, or 84% in all. In the previous quarter, the total refinancing into fixed rate loans was 82%. The survey said that 16% of borrowers chose to refinance back into a hybrid versus 18% previously.

Looking at borrowers that originally had a 30-year fixed mortgage, 82% chose to refinance into another 30-year fixed mortgage, 8% into a 20-year fixed, and 5% into a 15-year. Just 6% of the borrowers chose to refinance into a hybrid.

"Generally speaking, fixed-rate borrowers like to stick with fixed-rate products," Freddie Mac's deputy chief economist Amy Crews Cutts said. "This was true even in 2004, when there was a wide gap between 30-year fixed mortgage rates and one-year ARM rates, making ARMs relatively very attractive, and just 8% of 30-year fixed-rate borrowers jumped over to an ARM product."

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