The U.S. housing slump caused mortgage bond prepayments to slow in November, but not as much as had been anticipated, according to reports. Speeds slowed by about 5%-7% for Fannies, Freddies and Ginnies, but had been expected to drop by about 11%. Along with the weak housing market, the decline is owed to tighter lending practices and a lower number of collection days--down to 20 from 22 the previous month. The average 30-year fixed mortgage rates slumped to 6.21% in November from 6.38% in October, according to Freddie Mac. The more seasoned coupons and vintages slowed the most, said analysts. Paydowns dropped to $31.7 billion in November from $33 billion the previous month, according to Credit Suisse. Meanwhile, the fixed-rate net issuance spiked to $49 billion from $37.3 billion. Analysts differ on what to expect in December. Credit Suisse predicts a 5%-10% slowdown in prepayments, while JP Morgan is eyeing a 4% dip.
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