Home prices increased by about 4% from September 2011 to this September of this year. The trend in home prices is expected to continue into 2013, with further home price appreciation of about 5%, according to Credit Suisse (CS).

The improvement is based on continuation of low mortgage rates, home price performance as well as investor and potential homebuyer confidence in the market. 

Home price appreciation varied throughout the nation, with some of the hardest hit areas during the crisis — Arizona, California, Florida and Nevada — posting double-digit gains.

"Broadly speaking, continuing HPA should stimulate the overall refinancing environment by opening up credit availability," the report said.

Click on the graph to view HPA performance throughout the nation.

However, prepays on certain sub-sectors of agency mortgage backed securitizations are at bigger risk of speeding up. 

Low original loan-to-value ratio Making Home Affordable loans or MHA-eligible loans in the conventional space and 2010 vintage 4.5 and 5s in the Ginnie Mae space are two examples. 

Recent prepay data on low LTV MHA loans from high HPA states compared to low HPA states does not provide enough evidence for potential prepay risk to the low LTV MHA sector from continued HPA, the report stated. 

Click on the graph to view prepay speeds on low LTV MHA loans between low and high HPA states.

However, potential loosening of tight credit standards under a continued HPA scenario is expected to change current trends, Credit Suisse said.