In what may be the formation of a summer prepayment plateau, overall prepayment speeds for premium coupons - those above 8.5% - have begun a slowdown, while discounts have shown some pickup.

For Fannie Mae, premium 8.5s and 9.5s decreased by 7% and 6% to 16.4% constant prepayment rate and 15.6% CPR, respectively. Higher mortgage rates, which climbed about 40 basis points throughout the month of June, were considered the culprit for the slowdown, according to Warren Xia, prepayment analyst at Banc of America Securities.

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