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Mortgage Refinancing In 2009, many homeowners refinanced their mortgages to take advantage of lower interest rates. Most of the mortgages could be classified into four groups: adjustable rate, 15-year fixed rate, 20-year fixed rate, and 30-year fixed rate. (For this exercise, the small number of loans that are not of those four types will be classified with the adjustable rate loans.) Sometimes when a homeowner refinanced, the new loan was the same type as the old loan, and sometimes it was different. The breakdown of the percent (in decimal form) in each category is shown in the following table. If these conversion rates were to persist, find the 1ong-range trend for the percent of loans of each type. Source: Freddie Mac.
New Loan | ||||
15-Year Fixed | 20-Year Fixed | 30-Year Fixed | ||
Old Loan | Adjustable | |||
Adjustable | 0.04 | 0.22 | 0.07 | 0.67 |
15-Year Fixed | 0 | 0.70 | 0.02 | 0.28 |
20-Year Fixed | 0.01 | 0.545 | 0.075 | 0.37 |
30-Year Fixed | 0 | 0.145 | 0.055 | 0 80 |
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