Conventional mortgage-backed securities prepayment speeds in December slowed, marking what Barclays Capital called “the end of the 2010 refinancing ‘wavelet.’”
Credit Suisse said 30-year conventional prepayments dropped by 6% from November.
Barclays forecast that due to the sharp sell-off in rates at the end of 2010 there will be further prepayment declines in coming months.
Record-low rates during much of 2010 had prompted somewhat of a pickup in refinancing. But it was widely considered more of a refi “boomlet” than a full refi “boom” due to developments in the wake of the recent downturn that limited the extent to which some borrowers could get new loans. Barriers to origination have included tighter underwriting standards and home equity constraints.