Speed Watch: Streamlined Refinancing Helps To Fuel Latest Rise in Prepayment Speeds.(mortgage-backed securities)(Brief Article)(Statistical Data Included)

Prepayment rates for Fannie Mae mortgage-backed securities increased across the board in the February report, surpassing the speeds of comparable Freddie Mac MBS, some of which had soared.

However, the speeds fell short of the worst-case scenarios that had been foreseen by some analysts.

The biggest jumps in constant prepayment rates among 30-year Fannie Mae MBS were in the 2000 vintage 7.5% coupon (from 23.1 CPR to 38.8 CPR) and the 2000 vintage 8.0% coupon (from 33.2 CPR to 50.4 CPR), according to the Bear Stearns Prepayment Commentary.

Differences in weighted average coupon between vintages "continue to play a large role" in speeds, with higher-WAC 2000 vintage paper paying "significantly faster than 1999 production, even after adjusting for seasoning," said Bear Stearns analysts Dale Westhoff and Bruce Kramer.

Among Ginnie Mae 30-year MBS, the 2000 production recorded "uniformly slower" speeds than conventionals through the 8.0% coupon, they said, adding that servicer buyouts of delinquent loans "continue to have an impact" in the premium sector.

"Although speeds were fast in this report, they were still well below the doomsday 60+ CPR scenario predicted by many market participants," the analysts noted.

A week earlier, Freddie Mac MBS speeds had skyrocketed for some coupons in the report for the mid- January to mid-February period, although the increases were in line with the Bear Stearns analysts' expectations.