Agency MBS Speeds Rise

Prepayments on 30-year fixed-rate mortgages in agency mortgage-backed securities climbed 16% in March, in part because of a three-day increase in the business calendar and a seasonal rise in housing turnover activity, according to the Bear Stearns Prepayment Commentary.Fannie Mae 30-year collateral recorded a constant prepayment rate of 11.8 CPR overall for the month, up 1.7 CPR from their speed in February, compared with 10.7 CPR for 30-year Freddie Mac collateral, up 1.4 CPR from that of the previous month. "The cooling housing market is starting to take its toll on discount speeds," said Bear Stearns analysts Dale Westhoff and V.S. Srinivasan. "Adjusted for seasoning, relative coupon and seasonal factors, speeds on discount coupons have slowed 15%-20% from a year ago." Meanwhile, overall speeds for 30-year Ginnie Mae collateral increased by just 6%, although premium Ginnie Mae coupons continued to prepay faster than conventionals "mostly because of servicer buy-out activity, which adds about 5-6 CPR," the Bear Stearns analysts said. Bear Stearns can be found online at http://www.bearstearns.com.