Some prepayment reports are showing certain agency MBS speeds are picking up a bit, and at least one suggests that new FHA mortgage insurance premium changes could have a slight, mixed effect on Ginnie Mae bonds going forward.
A Barclays Capital report, for example, finds some agency speeds climbed a little in the most recent monthly prepayment report.
It also projects they could continue climbing for at least another month due to the continued influence of lower rates and the so-called 2.0 version of the government's Home Affordable Refinance Program, which has broadened the ability of certain more leveraged borrowers to refinance their loans.
In addition, the report indicated the Federal Housing Administration's new MIP changes could have a “twisted” effect that would be bifurcated by vintage.
Broadly put, Barclays projects that as a result of the changes pre-May 2009 loans will get a slight break in terms of MIP/upfront MIP when refinancing that could act as a bit of prepayment incentive. Conversely, post-May 2009 loans could pay slightly higher MIP/UFMIP when refinancing that could slow speeds a bit.
