Agency MBS Speeds Rise 'Modestly'

Overall prepayment rates on 30-year Fannie Mae and Freddie Mac mortgage-backed securities increased "modestly" in November, apparently as a result of an uptick in refinancing, according to Bear Stearns.The aggregate constant prepayment rate for Fannie Mae 30-year MBS was 21.6 CPR for November, up from 20.5 CPR in October, according to Bear Stearns analyst Dale Westhoff. "The increase was uniformly distributed across the meat of the coupon stack (5s through 6.5s) with no one coupon driving the movement in aggregate prepayments," Mr. Westhoff reported. He noted that there had been a 6-basis-point decline in mortgage rates from October to November, and a 4.5% increase in application activity as measured by the Mortgage Bankers Association. Freddie Mac 30-year MBS continued to prepay slower than Fannie Maes in November "across virtually all coupons and vintages," Mr. Westhoff said. Meanwhile, the overall speed gap between Ginnie Maes and conventional MBS was little changed in November, holding at just above 7 CPR for 30-year collateral versus Fannie Maes, according to Mr. Westhoff. Bear Stearns can be found online at http://www.bearstearns.com.