Agency MBS Speeds Rise 14%

Prepayment rates on 30-year fixed-rate mortgages in agency mortgage-backed securities rose 14% in October, according to analysts at Bear Stearns & Co.The increase in speeds reflected a 17-basis-point rally in mortgage rates and a one-day increase in the business calendar, senior managing directors V.S. Srinivasan and Dale Westhoff said. Aggregate speeds on 30-year Fannie Mae collateral stood at a constant prepayment rate of 11.4 CPR for the month, up 1.2 CPR from their September levels, while 30-year Freddie Mac speeds registered at 10.6 CPR, up 1.5 CPR, the analysts reported. Over all, speeds on 2006 Fannie Mae originations rose from 8.1 CPR in September to 10.5 CPR in October, while more-seasoned vintages recorded a smaller increase. Speeds on Ginnie Mae 30-year collateral rose by 5%. "We expect next month's report to show a 5% decline in speeds on discount coupons, while speeds on premium coupons should remain relatively unchanged," the analysts said. Bear Stearns can be found on the Web at http://www.bearstearns.com.