Ginnie Mae Prepayments Outpace Other Classes of MBS.

Prepayment rates for Fannie Mae and Freddie Mac mortgage-backed securities slowed significantly among 5.5%-6.5% coupons in June, while Ginnie Mae MBS speeds held steady or slowed only moderately.

According to the Bear Stearns Prepayment Commentary, the constant prepayment rates of the new 30-year Fannie Mae 5.5% coupon slowed from 22.3 CPR in May to 17.2 in the June reporting period, a slowdown of 23%.

The comparable figures for the new Fannie 6.0% coupon were 37.7 CPR in May and 29.4 CPR in June, a 22% drop, Bear Stearns analysts Dale Westhoff and Bruce Kramer reported.

The speeds recorded for comparable Freddie Mac MBS showed "slightly larger" declines through the 6.5% coupon. But this pattern did not hold for Ginnie Mae MBS.

"In contrast to conventional speeds that were down 20%-25% in the largest issues, [Ginnie Mae] prepayments for the June reporting period were flat to very modestly slower across the entire coupon stack - well above most expectations," the analysts said.

They attributed the disparities between Fannie/Freddie speeds and Ginnie speeds - which "have almost become the norm in recent years," the analysts said - to several factors.

The factors include the ability of many Ginnie borrowers to qualify for conventional financing, "more aggressive pricing and competition" for subprime loans, expansion by the government-sponsored enterprises into the alternative-A sector, and servicer buyouts, Mr. Westhoff and Mr. Kramer said.