Prepayments on loans backing Fannie Mae, Freddie Mac and Ginnie Mae securities showed a sharp decline in January as interest rates continue to climb from historic lows, according to investment bank Keefe, Bruyette & Woods. Total prepayments for Fannie mortgage-backed securities dropped to a constant prepayment rate of 19.3% from more than 25% in December and 26% in November. The CPR is the ratio of mortgages prepaid in a certain time period. CPR for Freddie fell to 21.5% from 28.5% in December and 30.6% in November. Ginnie CPR fell to 13.2% in January from 19% in December and 19.5% in November. "Prepayment speeds were generally down across the board for both fixed-rate and hybrid ARMs," KBW analysts said. KBW said rates are still low, but with the steady increases since November, refinancings will start to drop off, leaving purchases to drive the majority of origination volume in 2011. One risk MBS investors hold is that too many borrowers will pay ahead of time, cutting off investors from future coupon payments. Lower prepayment speeds in January support its view that real estate investment trusts that invest heavily in MBS will fare better than in the fourth quarter when prepayments were still high. "We believe these trends support our view that the agency MBS REITs can continue to generate attractive and stable dividends as the yield curve remains steep and amortization expense from prepayments remains relatively stable," KBW said. Write to Jon Prior. Follow him on Twitter: @JonAPrior