Agency MBS Speeds Rise

Prepayment rates on 30-year fixed-rate mortgages in Fannie Mae and Freddie Mac mortgage-backed securities increased by 21% in March, according to the Bear Stearns Prepayment Commentary.Overall speeds on 30-year Fannie Mae collateral came in at a constant prepayment rate of 13.6 CPR for the month, up 2.4 CPR from February, Bear Stearns analyst Dale Westhoff reported. Speeds for comparable Freddie Mac mortgages averaged 11.8 CPR, up 2.1 CPR. "With 30-year mortgage rates relatively unchanged, the increase in prepayments can be attributed to a four-day increase in the business calendar and a seasonal uptick in housing turnover activity," Mr. Westhoff said. The analyst said the one surprise in the prepayment report was "the sharp increase in speeds on the 2005 cohort," which he said is probably a response to the "significant levels of appreciation" that many homeowners have seen over the past year. Overall speeds for 15-year Fannie and Freddie MBS collateral rose by 20%, comparable to the rise in 30-year prepayments, but the speeds of agency hybrids rose sharply and continue to prepay "significantly faster" than their fixed-rate counterparts, the analyst said. Bear Stearns can be found online at http://www.bearstearns.com.