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Mortgage Investors Brace for Coming Wave of Loan Refinancings

  • First quarter may see “perfect prepay storm:” Wells Fargo
  • Specified pool trading in January highest since mid-2011
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Mortgage Investors Brace for Loan Refinancing Wave

With the 30-year mortgage rate just 14 basis points above its all-time low of 3.31% seen in November 2012, mortgage-backed security investors are bracing themselves for a wave of refinancings in the coming months.

The prevailing sentiment for higher prepayments ahead is shown by a Bloomberg Barclays U.S. MBS index duration that is just 2.62 years, down from 4.71 one year ago and approaching the trailing-one year low of 2.34 seen on Sept. 4, according to data compiled by Bloomberg.