Based on rising mortgage rates, a lower day-count and a declining refinance index, June prepayment rates are expected to fall by 10%.

For instance, Freddie Mac’s 30-year survey rate rose by 10 basis points from 3.45% in April to 3.54% in May, which will predominantly affect June prepayments — assuming a shorter one-month lag from application to closing as volumes slow, Royal Bank of Scotland (RBS) said in its latest report. 

Meanwhile, day-count will decrease by 9% from 22 to 20 days and seasonality will slightly improve.

“In particular, we expect a a 3 to 4 conditional prepayment rate decline 3.5 coupons to 4 coupons due to higher mortgage rates, but a moderate change in 5 coupons and 6 coupons,” said Sarah Hu and Ashley Gam, agency mortgage-backed securities strategists for RBS.

 

 

Most Popular Articles

Realtors expect these to be the 10 hottest housing markets for the next 3-5 years

Here are the 10 housing markets that the National Association of Realtors expects to the hottest in the nation in the next three to five years.

Dec 11, 2019 By

Latest Articles

Here’s what will happen in multifamily real estate in 2020

In an interview with HousingWire, RealPage Chief Economist Greg Willett said the apartment market is in great shape, and even the luxury market will see competition in 2020.

Dec 13, 2019 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please