MBS Investors Look for Signs Homeowner Refinancings Have Peaked
- Prepayment speeds have plateaued, albeit at elevated levels
- Refinance applications index surged 11% in the latest report
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Mortgage-bond investors are looking for signs that the wave of American homeowners refinancing their loans may have crested.
Agency mortgage-backed securities prepayment rates “have reached ‘terminal velocity’ -- the maximum prepayment rate attainable given both servicer capacity and underwriting criteria,” according to Glenn Schultz, director of prepayment modeling at MUFG Securities.