After the refinancing boom that characterized 2003 prepayments, turnover should be the story in 2004.

"As long as the economic recovery remains on track, mortgage rates will remain elevated and refinancings will become less of an issue," said Steven Bergantino, a senior vice president in mortgage research at Lehman Brothers. "We expect that in the year ahead - with a flat to rising rate environment - investors will begin to focus more and more on housing turnover."

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