Currently, 93.1%, or $2.6 trillion, of the fixed rate MBS universe is exposed to refinancing risk at a 5.45% mortgage rate, says Bear Stearns. This level of exposure is similar to that of last October. So what does this translate into in terms of origination and prepayments?
Bear Stearns is currently projecting total mortgage originations of $3.7 trillion and agency issuance of $2.3 trillion. At the same time, the Mortgage Bankers Association (MBA) is predicting that mortgage originations will reach $3.0 trillion versus $2.5 trillion in 2002. The MBA anticipates refinancings to represent 65% of originations versus 59% last year.