Mortgage Investors' Refinance Concerns Rise With Rate Rally
- U.S. 10-year yield drops to lowest since September 2017
- Primary rates below 4% can spike convexity flows: Brean
Homes in Elgin, Illinois.
Photographer: Daniel Acker/BloombergThis article is for subscribers only.
Mortgage prepayment speeds may rise with the strong U.S. rate rally, and that may be cause for alarm for mortgage investors.
Aggregate prepayment speeds for the Fannie Mae 30-year universe have risen by 10%, 25% and 24% over the last three reports. Now, a rally that has pushed U.S. 10-year Treasury yield to 2.21%, its lowest level since September 2017, and a Freddie Mac 30-year mortgage rate lower for four consecutive weeks may spark more refinancings if sustained.