Bear Stearns stated Alt-A prepayments in the current environment appear somewhat more unpredictable compared to previous experience.

Analysts report that this phenomenon might be the result of the recent spate of mortgage market product innovation, specifically, hybrids and IOs. These products, created to extend affordability to borrowers, are probably being targeted specifically towards Alt-A borrowers, according to Bear Stearns. From the lender's perspective, the rate premium typical in the traditional Alt-A sector makes these borrowers good candidates for refinancing into an "affordability" product. Specifically, Bear Stearns said accelerated Alt-A speeds in recent months could be explained by new product innovation.

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