Fannie Speeds Flat; Freddie's Rise

Prepayment rates for 30-year Fannie Mae mortgage-backed securities were little changed in December, while 30-year Freddie Mac MBS speeds rose modestly, according to Bear Stearns.For Fannie 30-year MBS issues, the aggregate prepayment rate increased by a constant prepayment rate of 0.1 CPR in December, compared with 0.7 CPR for Freddie Mac issues, Bear Stearns analyst Dale Westhoff reported. "These small changes in prepayments reflect the stable mortgage rate environment over the last few months," he said. Speed differentials between Fannies and Freddies decreased in the December report. Freddie Mac MBS speeds were still slower than Fannie Mae's on most new cohorts, but "speeds on seasoned cohorts converged," Mr. Westhoff said. Meanwhile, Ginnie Mae speeds held steady or fell modestly in December. Ginnie Mae "continues to pay faster than conventionals across the entire coupon spectrum, with the biggest gap observed in the lowest coupons," the Bear Stearns analyst reported. Bear Stearns can be found online at http://www.bearstearns.com.