Fannie Mae speeds declined about 5% on aggregate, which is in line with expectations. Of note, however, speeds dropped greater than expected on the 7% vintages. Despite mortgage rates dropping seven basis points, and an extra 1.5 days on the business calendar, pre-pays slowed, probably attributable to the December holiday schedule, said analysts from Lehman Brothers.

Looking to February, researchers from JPMorgan Securities expect speeds to decline 8% to 10% as the Refi Index falls over this period. Also, there are fewer business days in February. JPMorgan currently predicts an uptick in pre-pays to between 10% and 12% in March. Both Lehman and Salomon Smith Barney, on the other hand, believe that February speeds will be in line with or above January speeds. The January rebound in the MBA Refi Index will counter the fewer days, the banks speculated.

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