Stability-hungry borrowers are ditching adjustable-rate mortgages and refinancing into fixed-rate loans.

"Everybody's frightened about inflation, so if they have an adjustable loan, that's the No. 1 reason they're getting out of them," says Jeff Lazerson, president of Mortgage Grader, a lender based in Laguna Niguel, Calif. "It's not because you can get them at a better rate, but because you can get them at a stable rate."

Other borrowers swing from one hybrid ARM to another, says Matt Hackett, underwriting manager for Equity Now, a direct mortgage lender based in New York City.

"We've done a few of those for people who were in a five-year ARM that they originated four years ago, that was getting ready to adjust," Hackett says.

Even though the rates were about to adjust downward, they got new 5/1 ARMs to extend low rates another five years.