Prepayment speeds on 30-year FNMAs in January fell more than 20% from December's levels, versus consensus expectations of 15% to 16%. The decline was fairly uniform across both discounts and premiums.

In comments from JPMorgan Securities, analysts stated that the drop in discount speeds cannot be totally explained by current seasonal patterns. They believe that declines in cash-out refinancing activity and higher hybrid ARM rates have also contributed to the pressure on lower coupon speeds.

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