U.S. Prepayments Slowed in November

The U.S. housing slump caused mortgage bond prepayments to slow in November, but not as much as had been anticipated, according to reports. Speeds slowed by about 5%-7% for Fannies, Freddies and Ginnies, but had been expected to drop by about 11%. Along with the weak housing market, the decline is owed to tighter lending practices and a lower number of collection days–down to 20 from 22 the previous month. The average 30-year fixed mortgage rates slumped to 6.21% in November from 6.38% in October, according to Freddie Mac. The more seasoned coupons and vintages slowed the most, said analysts. Paydowns dropped to $31.7 billion in November from $33 billion the previous month, according to Credit Suisse. Meanwhile, the fixed-rate net issuance spiked to $49 billion from $37.3 billion. Analysts differ on what to expect in December. Credit Suisse predicts a 5%-10% slowdown in prepayments, while JP Morgan is eyeing a 4% dip.