Prepayments on 30-year Fannie Mae MBS rose 6% overall and were in-line with consensus expectations of 5% last week. July's lower day count partially offset higher refinancing activity observed in late June through early July as mortgage rates dipped to a 14-month low.

In general, however, 4.5% and 5% coupons, and 2004 vintage 6s prepaid slightly faster than anticipated, while higher coupons prepaid slower. Speed increases were slightly higher on 30-year Freddie Mac 5s and 5.5s versus Fannie Mae, while percentage increases on higher coupons were less. Freddie speeds, however, remain similar to about 2% CPR slower than corresponding Fannie speeds. The strong clip in discount prepayments is related to the ongoing strength in existing home sales, cash-out refinancings, as well as, the lack of lock-in says JPMorgan.

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