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Thirty-Year Conventional Prepayment Speeds Get Faster

JAN 8, 2013 12:58pm ET
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Thirty-year conventional prepayment speeds increased 4% in December from the previous month, according to Credit Suisse.

RBS, which also noted an increase in speeds, called the upward move “somewhat counterintuitive” given prepayments rose “despite…a largely unchanged refinance index.”

“The faster prints were possibly driven by a combination of expanding lending capacity, a stronger media effect and continued HARP activity in higher coupons,” according to RBS, which had anticipated a modest decline of less than 5% in speeds.

Barclays believes relatively lower levels of index activity seen recently will eventually affect some prepayments, but its researchers also noted that Home Affordable Refinance Program activity will increase further due to Bank of America’s recent sale of servicing rights to buyers focused on it.

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