Last Thursday, the housing agencies released their July prepayment reports, with the FNMA 30-year 5s and 5.5s having prepaid slightly faster than expected, although premiums were in line to marginally slower than Street expectations.

Despite FNMA 5s and 5.5s being marginally faster, speeds on the 6% coupon were a mixed bag depending on the vintage. For instance, 2004 originations prepaid slightly faster, at 34.1 CPR in July, versus 31 CPR in June. On the other hand, the 2003 vintage prepaid slightly slower, decreasing to 31.8 CPR in July from 32.4 CPR the previous month, a 2% decline. Meanwhile, 6.5 and higher coupons, which only comprise a small portion of the current market, came in slower than anticipated, which analysts reported is only mildly surprising.

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