FNMA speeds in April were slower than consensus estimated. Speeds were expected to decline about 8% to 10% primarily as a result of the lower amount of collection days, 19 versus 23 in the previous month. However, CPRs were down around 10% to 13% for 4.5s through 2005 vintage 5.5s; and 15% to 20% for more seasoned 5.5s and higher coupons.  "While the Easter holiday and higher rates can explain some of the additional slowdown," Lehman Brothers analysts said. "We see this as another sign of a cooling housing market."

Gold speeds recorded larger percentage declines for certain lower coupon vintages compared to FNMAs.  Speeds on lower coupons are similar to comparable FNMAs.  In general, higher coupons declined similar to slightly less than comparable FNMAs.  Still, speeds on Golds  are 1 to 2 CPR behind comparable FNMAs for many coupons and vintages.

Meanwhile, GNMA speeds were generally in-line with expectations for 4.5s through moderately seasoned 6s.  Older 6s and higher coupons prepaid slightly faster.  Speeds remain much faster than conventionals for most coupons and vintages.    

Credit Suisse analysts estimate paydowns totaled $35 billion, down 12% from March levels. They note that fixed rate issuance jumped to nearly $24 billion versus $10 billion in March with 30-year conventionals at $28 billion and 15s declining close to $5 billion. 

Looking ahead to the May reports, speeds are expected to pick back up. Consensus has been estimating speeds rising around 10% for 4.5s through 5.5s, while higher coupons are predicted at about 5%.  Day count rises back up to 22 days from 19. Partially offsetting is a 3% decline, on average,  in refinancing activity.

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