Flattened Ginnie roll rates in 2Q could mean slower prepays: Credit Suisse
The amount of Ginnie Mae-held loans rolling from 60 days to 90 days delinquent slowed in the second quarter, after spiking last year. According to research from Credit Suisse, this could signal slower involuntary prepayments going forward. The Ginnie Mae share of agency fixed-rate issuance dropped to 33% in August, from 36% in July. Its total 30-year gross and net issuances in August were $28.8 billion and $22.7 billion respectively, both down from $31.4 billion and $15.2 billion in July. Credit Suisse analysts believe Ginnie will continue to depress its share of agency fixed-rate issuance because of higher prepays and the Federal Housing Administration annual premium hikes that begin in October. Ginnie Mae prepayment speeds increased 10% in August but should begin to slow in November. "Our November projections factor in the likely impact of an increase in the FHA upfront premium on prepay speeds based on a reduction in refi incentives," according to the report. But some front-loading refinancing is occurring ahead of the premium increases, and "more dampening in prepay speeds than projected could occur starting in November." Write to Jon Prior.