The 30-year mortgage has long been the default choice for U.S. homeowners. However, recent refinancing trends, suggest the 15-year mortgage is attracting renewed attention. For lenders and risk managers, this is more than a simple shift in consumer preference. It points to a group of homeowners intentionally paying down debt faster, which can influence credit risk, portfolio management, and mortgage servicing rights (MSRs).
Signs of Changing Borrower Behavior
Refinancing remains a significant component of mortgage activity. The Mortgage Bankers Association does not report a separate share for 15-year loans, but refinancing accounted for 53.6 percent of all applications in October 2025 (1). Those who are refinancing are precisely the borrowers most likely to choose a shorter-term loan.
Interest rate differences appear to be a strong motivator. Freddie Mac’s Primary Mortgage Market Survey shows the average 15-year fixed mortgage rate at 5.52 percent as of October 16, 2025, compared with 6.27 percent for a 30-year loan (2). For many homeowners, this difference presents a tangible financial advantage and an incentive to shorten the term of their loan.
Who Is Opting for 15-Year Loans?
Borrowers choosing 15-year mortgages tend to meet higher credit and equity standards. Lenders generally require a FICO score of 740 or higher and a maximum loan-to-value ratio of 80 percent to avoid private mortgage insurance (3). These criteria suggest lower credit risk, but they also create portfolio considerations.
Short-term loans allow equity to build quickly, providing a buffer in case of default. At the same time, they prepay faster, which increases prepayment risk and requires a more active origination pipeline to maintain portfolio size. Additionally, mortgage servicing rights are less valuable when the underlying loans are shorter, since the revenue stream is reduced.
A Divided Market
The resurgence of 15-year mortgages seems concentrated among financially secure homeowners who are taking advantage of favorable rates to pay down debt. In contrast, first-time buyers and those with tighter budgets continue to rely on 30-year loans. For these households, higher monthly payments make a 15-year mortgage impractical.
Implications for Lenders and Risk Managers
For lenders, the return of the 15-year mortgage offers both opportunity and challenge. These loans are generally lower risk, but they require careful portfolio management due to faster payoffs and lower MSR value. With the Federal Reserve maintaining a higher-for-longer interest rate environment, this split-market dynamic is likely to persist, emphasizing the need for strategic planning and borrower segmentation.
Citations:
[1] Mortgage Bankers Association. (October 15, 2025). Weekly Applications Survey. https://www.mba.org/news-and-research/research-and-economics/single-family-research/weekly-applications-survey
[2] Freddie Mac. (October 16, 2025). Primary Mortgage Market Survey. https://www.freddiemac.com/pmms
[3] Experian. 15-Year vs. 30-Year Mortgage: Calculate the Best Loan. https://www.experian.com/blogs/ask-experian/15-year-vs-30-year-mortgage/
Heather Zeller
Heather Zeller, Senior Vice President of Marketing at Veros Real Estate Solutions (Veros) and Valligent, brings over 25 years of expertise in marketing, product strategy, and corporate growth across financial services, real estate, and fintech. With a strong foundation in Marketing, Economics, and Business, she drives brand innovation and market leadership.
