Thirty-year conventional prepayment speeds overall dropped 8% in the latest month, although the Home Affordable Refinance Program continues to accelerate speeds in certain pools, according to Credit Suisse research.
For example, HARP speeds on Bank of America-issued Fannie Mae pools in November, adjusted for day count, continued to rise, according to a CS report.
When asked about the outlook for prepayments next year, Mahesh Swaminathan, a managing director at Credit Suisse, told this publication that speeds on older, HARP-eligible loans “should continue to remain fast, or maybe even a touch faster.
“That dynamic probably continues for at least the first half of next year, perhaps a little longer,” he said.
But over time rising guarantee fees are likely to constrain prepayments to some extent on post-HARP mortgages.
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In addition to the rep and warranty reform, factors that could improve the ability of these borrowers to refinance include some relative strengthening in home prices that should help bolster loan-to-value ratios, he said.
Freddie Mac chief economist Frank Nothaft said in an interview that home price appreciation increases in national home price indices have not been “huge” but are “the best news we’ve had in quite some time.”
Nothaft in his recent economic
