Mortgage Bond Market on Edge After a Spike in Home Refinancings

  • Prepayment concerns are center stage after a long slumber
  • Recent vintage mortgages considered most vulnerable to prepays

Photographer: Jacob Kepler/Bloomberg

Lock
This article is for subscribers only.

A spike in home loan refinancing, falling mortgage rates and newer collateral sporting prepayment red flags have increased prepayment concerns among mortgage-backed securities investors.

The latest refinance index report from the Mortgage Bankers Association showed the index at 1289, its highest since Feb. 2, 2018. While this is still low from a historical standpoint -- the trailing five-year average is 1496 -- the index is 14 percent higher from a year ago and 77 percent higher year-to-date.