Prepay Commentary

April MBS Prepayment Speeds

Overall, prepayments increased across the board in March. Part of the increase is seasonal as the 2019 “housing season” has kicked off in many markets, but a good portion is refinance activity as evidenced by the MBA Refinancing Index hitting a level not seen since 2016.

Notables and Thoughts

Based on the Freddie Mac Primary Mortgage Market Survey, 30 and 15 year fixed-rate mortgage rates are down 86 and 80bps, respectively, from their recent highs and are approaching levels not seen since the beginning of 2018. Along with continued seasonal factors, this could point towards faster speeds next month as well.

(WSJ) The 4% Mortgage Is Back

“Just a few months ago, average rates were on the verge of hitting 5%, drying up refinancings and putting a damper on home price growth. While the housing market remains cooler than it had been at its peak, lower mortgage rates are again raising hopes for a rebound as the spring selling season gets under way.”

(Politico) Senate confirms Calabria to lead housing finance overhaul

“Determining the fate of Fannie Mae and Freddie Mac is the top question that has roiled the housing market since the government seized the two companies in 2008 after a massive bailout to prevent their collapse during the mortgage crisis.”

FNMA Speeds by Vintage Year

FGLMC Speeds by Vintage Year

GNMA Speeds by Vintage Year

Non-Generic Collateral Comparison Tables

Kevin A. Smith, CFA

SVP, Director Investment Product Strategies

Vining Sparks

Adam Hofer

Analyst, Investment Product Strategies

Vining Sparks

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