The vast majority of adjustable-rate mortgage borrowers chose fixed-rate loans when they refinanced in the second quarter, according to Freddie Mac.Of those borrowers who originally had a one-year ARM, 85% chose a fixed-rate mortgage in the second quarter, as did 86% of borrowers who originally had a hybrid ARM, Freddie Mac said in its Refinance Product Transition Report. "While most borrowers still prefer to refinance into fixed-rate mortgage products, the widening spread between fixed- and adjustable-rate mortgages in the second quarter made ARMs a bit more attractive than they had been," said Amy Crews Cutts, Freddie's deputy chief economist. "With the recent contractions in mortgage lending standards and increasing emphasis on underwriting borrowers to fully indexed rates on adjustable-rate mortgages, it is likely that we will see more demand for fixed-rate products for both new home purchases and refinances in the future." Freddie Mac can be found online at http://www.freddiemac.com.

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