Notwithstanding the considerable backup in mortgage rates the week prior, the Mortgage Bankers Association (MBA) Refinancing Index broke all-time records last week as it approached the 10,000 mark. The Index jumped 5.2% to a whopping 9387, outpacing the previous week's record-breaking showing of 8921. This should have a tremendous impact on prepayment speeds going forward, egging them on faster than ever.

"The impact on prepayments of the recent spike in the Index could be substantial," said analysts from Salomon Smith Barney last Wednesday. "A simple calculation shows that if the average MBA Refinancing Index for March ends up at 7500, then it may translate into roughly 25% to 30% increase in speeds over the next few months." Salomon added that the sharpest increase in speeds will probably be seen in the cuspy coupons.

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