Agency MBS Speeds Rise

Prepayment rates on 30-year fixed-rate mortgages in Fannie Mae and Freddie Mac mortgage-backed securities increased by a constant prepayment rate of 1.2 in May, according to the Bear Stearns Prepayment Commentary.Overall speeds on 30-year Fannie Mae collateral came in at 12.6 CPR for the month, while speeds for comparable Freddie Mac mortgages averaged 11.2 CPR, Bear Stearns senior managing directors V.S. Srinivasan and Dale Westhoff said in the report. "A seasonal increase in housing turnover activity and a two-day increase in the business calendar more than offset the 12-bp increase in mortgage rates," the analysts said. Prepayments on 30-year Ginnie Mae collateral rose from 15.8 CPR to 16.9 CPR. The analysts predicted a "pronounced slowdown" in speeds over the next few months "as the rate of home price appreciation moderates and the full impact of the increase in mortgage rates is factored in." Bear Stearns can be found online at http://www.bearstearns.com.