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In the third quarter of 2011, fixed-rate loans accounted for more than 95 percent of refinance loans, based on the Freddie Mac Quarterly Product Transition Report. Refinancing borrowers clearly preferred fixed-rate loans, regardless of whether their original loan was an adjustable-rate mortgage (ARM) or a fixed-rate.

An increasing share of refinancing borrowers chose to shorten their loan terms during the second quarter. Of borrowers who paid off a 30-year fixed-rate loan, 40 percent chose a 15- or 20-year loan, the highest such share since the second quarter of 2003.

Sixty-three percent of borrowers who had a hybrid ARM chose a fixed-rate loan during the third quarter, while the remaining 37 percent chose to refinance into the same type of product.

C.A.R.