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
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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.