Fixed-rate agency mortgage-backed securities prepayments declined moderately in the latest month, according to Wall Street reports.
The weighted average Fannie Mae prepayment rate dropped to 23.1% in December from 24.7% in November, according to Keefe, Bruyette & Woods. The equivalent Freddie Mac prepayment rate slid to 24.3% from 25.7%.
Barclays Capital researchers attributed the slight decline to reduced refinancing activity during the month as a result of the holiday season.
Different government initiatives could have conflicting effects on prepayments this year.
Some programs, like continuing Fed reinvestment in MBS, could keep putting downward pressure on rates. But moves like the planned increase in the agencies' guarantee fees “should slow prepayments, all else being equal,” Sterne AG mortgage strategist Kevin Cavin told this publication.
