Thirty-year conventional securitized mortgage prepayment speeds in June jumped by 16% from the previous month but they were close to 30% lower than year-ago levels, according to Credit Suisse.
The latest round of prepayments came in “more or less as expected with a small increase in the cuspy coupons,” Mahesh Swaminathan, a managing director at the company, told this publication.
“There had been some variation across the Street with some people having higher numbers, so I think on balance it was mostly in line [with expectations],” he said.
“The main takeaway is that speeds are still about 30% below where they were for the same type of refi incentive last year,” said Swaminathan, a senior strategist at Credit Suisse and head of the mortgage-backed securities strategy group.
“Burnout has been a big [factor] and then the mix of what’s outstanding has also shifted. So for any given mortgage rate borrowers as a whole have about 20 basis points of less incentive now than they had before,” Swaminathan said.
