Prepayment rates for 30-year mortgages in Fannie Mae mortgage-backed securities fell by only 10% in December despite a 28-basis-point rise in mortgage rates, but the aggregate speed was the lowest in five years, according to Bear Stearns & Co.The aggregate speed on 30-year Fannie Maes was a constant prepayment rate of 13.8 CPR, down from 15.4 CPR in November, marking the first time it has been below 15 CPR since January 2001, said Bear Stearns analyst Dale Westhoff. The aggregate prepayment rate on Freddie Mac 30-year collateral declined 13%, from 14 CPR in November to 12.1 CPR in December. Meanwhile, aggregate speeds for 30-year Ginnie Mae collateral fell by 10%, from 21.4 CPR in November to 19.3 CPR in December. Mr. Westhoff said the speed decline for Ginnie Maes was uniformly distributed across the coupon stack. "Despite the relatively stable mortgage rates over the last two months, we would expect prepayments to decline by over 15% [in January], with premium coupons showing a larger decline," the analyst said. Bear Stearns can be found online at http://www.bearstearns.com.

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