With home price growth starting to revert back to more historical norms - increasing at a slower pace than in the earlier part of 2002 - mortgage analysts said that this would affect prepayment speeds going forward.

Last week, the Office of Federal Housing Enterprise Oversight (OFHEO) released its House Price Index for the third quarter, which stated that average home prices went up by only 0.84% in Q3 compared to the previous quarter's increase of 2.34%. The report also said that seven states, as well as 33 out of 185 Metropolitan Statistical Areas (MSAs), experienced a quarterly drop in home price growth.

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