Agency MBS Speeds Decline

Prepayment rates on 30-year fixed-rate mortgages in Fannie Mae and Freddie Mac mortgage-backed securities declined by 16% and 15%, respectively, in April, according to the Bear Stearns Prepayment Commentary.Overall speeds on 30-year Fannie Mae collateral came in at a constant prepayment rate of 11.4 for the month, down 2.2 CPR from March, Bear Stearns senior managing directors V.S. Srinivasan and Dale Westhoff said in the report. Speeds for comparable Freddie Mac mortgages averaged 10.0 CPR, down 1.8 CPR. "Improving seasonal factors affecting turnover gave way to the drag imposed by a three day decline in the business calendar and a 9 [basis point] back up in rates," they said. The two analysts added, "the decline in speeds was 0.5 to 1.0 CPR more than expected." Overall prepayment speeds for 15-year Fannie and Freddie MBS collateral declined 10%, less than 30-year collateral. Prepayment speed declines on agency hybrids ranged from less than 8% for 3/1 hybrids and 10% for 5/1 hybrids to almost 13% for 7/1 and 10/1 hybrids. Bear Stearns can be found online at http://www.bearstearns.com.