Given the 51% surge in the Refinance Index on average in March compared with February, speeds were expected to increase about 20% on aggregate for FNMA.

However, speeds were unchanged with 6% and 6.5% coupons slowing slightly, while lower coupons were slightly higher. It was a similar story in FHMLC Golds.

Meanwhile, GNMAs were more in line with expectations, rising 11% with the increases primarily in 5s and 5.5s.

The lack of response in speeds to mortgage rate levels is likely related to capacity constraints at mortgage lenders.

Other reasons suggested include higher upfront costs for borrowers to close their loan and possibly borrowers' lack of knowledge about the GSE's refinancing programs. In addition, there is the ongoing decline in home prices and increased unemployment.

According to eMBS, FNMA prepaid at 21.4 CPR, down 0.3 CPR from March, FHLMC Golds prepaid at 23.8 CPR, also lower by 0.3 CPR; while GNMA increased 2.3 CPR to 27.9.

Gross issuance totaled $135.5 billion compared to $178.1 billion in March, while paydowns were $107 billion, similar to the previous month. Net issuance was $28.2 billion, down from $72.2 billion previously.

Looking ahead to May, speeds have been projected to increase 40% on FNMAs but outlooks are likely to be revised downward as refinancing activity has declined in recent weeks despite the historically low mortgage rate levels.

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