Fannie Mae and Freddie Mac Prepayment Speeds Slow Down in January.

Prepayment rates for Fannie Mae and Freddie Mac mortgage-backed securities slowed down in January for most 30-year coupons and vintages, while Ginnie Mae MBS speeds were mixed.

The slowdown in constant prepayment rates averaged 2-3 CPR for most coupons, while the 2002 vintages slowed even less or, in the case of the 5.5% and 6.0% coupons, speeded up slightly, according to the Bear Stearns Prepayment Commentary.

"The numbers show little evidence of burnout in the fully refinanceable conventional coupons, even among the most seasoned vintages," said analysts Dale Westhoff and Bruce Kramer. "For example, January marked the fourth consecutive month that 1998 6.5s have paid above 60 CPR and 2000 7.0s above 70 CPR."

As for Ginnie Mae MBS speeds, most issues held steady or rose somewhat in the January reporting period.

The Bear Stearns analysts said this may represent "the leading edge of a borrower response" to the falloff in mortgage rates in late December, or a reflection of servicer buyouts.

"With delinquencies running at all-time highs in the (Ginnie Mae) sector, we expect servicer buyouts to be a significant factor" in Ginnie Mae prepayments this year, they said.

Messrs. Westhoff and Kramer, joined by analyst V.S. Srinivasan, said in another Bear Stearns publication, Short-Term Prepayment Estimates, that near peak-level prepayment rates are likely to continue into the second quarter, contrary to the conventional wisdom at the beginning of the year.