While the May prepayment report was all about Home Affordable Refinance Program (HARP) refinances, June was about the rate incentive that credit-eligible borrowers had as mortgage rates began setting successive new lows beginning in May.

The low rates gave many borrowers underlying 3.5% and 4.0% coupons a very attractive refinance opportunity. Indeed, the speed on FNMA 30-year 2011 and 2010 vintage 3.5s surged 72% on average and 4.0s by 34% compared to an expectation of 28% and 19%.  

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