June factor reports will be released starting tonight. Paydowns are projected in the mid-$40 billion area.

Speeds are expected to slow 3% to 4% on average in response to a decline in refinancing activity during the period as a result of higher mortgage rates, tight lending standards, ongoing housing weakness and low consumer confidence.  The Mortgage Banker's Association Refinance Index averaged just 2036 in May, down 15.6% from April's average.

The latest home price data continued to show declines. For example, the S&P/Case-Shiller home price indices for April noted that, "all 20 MSAs [are] now posting annual declines, 13 of which are posting record low annual declines, and 10 of which are in double-digits." 

The 10-city composite recorded a new annualized record low of negative 16.3% and the 20-city composite, a record low of negative 15.3%. For the month, the 10- and 20-city composites were down 1.6% and 1.4%.

The Conference Board's consumer confidence index reported a decline in its index in May to 57.2 from 62.8 in April. This was a 16-year low with consumers pessimistic on business conditions and jobs. In June, confidence eroded even further to a record low of 58.1 with consumers' outlook very "bleak."

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