For the November report, Fannie Mae/Freddie Mac prepayments slowed to an average of 20% across all coupons and vintages. Speeds for the month “took a giant step toward converging to our long run expectations,” said Bear Stearns.
Bear attributed the slowdown to shortened month, as there are the four less business days in November. Another factor is the continued drops in refinancing demand. Despite mortgage rates falling to 6.00% from 6.25% over the period, there was no residual refinancing seen in the numbers.