Freddie Mac's Conventional Mortgage Home Price Index (CMHPI) reported last week that home values rose by an annualized rate of 4.8% in the third quarter, a figure that is almost flat relative to the previous quarter's revised annualized rate of 4.9%.

A UBS report noted that Freddie's latest home price data "paints a picture of steady, solid home price appreciation." If the current data presents an accurate and lasting picture, discount speeds should be quite robust in a selloff, added analysts. This is because home price appreciation drives housing turnover, with borrowers often trading up to a better house. Housing turnover, in turn, drives discount speeds.

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