With the 30-year fixed mortgage rate hitting another record low last week, the market is bracing for a serious pick-up in prepayment speeds. Rates fell to 5.79%, according to Freddie Mac's primary Mortgage Market Survey last week.

"If rates stay where they are right now into the middle of March, we would probably see prepayments on 6s and 6.5s in the April report top peak speeds seen in December," said Art Frank, head of mortgage research at Nomura Securities International.

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