Prior to the release of the June prepayment report last Friday (reflecting May activity), analysts were predicting a slowdown in May speeds.

April speeds were the peak of the recent mini-refinancing wave, Citigroup Global Markets said. The firm had expected speeds to drop considerably for the June report. Citi's aggregate speed model predicted speeds of roughly 23% to 24% CPR in May, a decrease of about 30% from the prior month. This dip should largely reflect the increase in interest rates and a 1.5-day drop in day count. It should also totally offset the rise in turnover seasonals as housing sales usually rise by roughly 10% from April to May.

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