New Low Rates Prompt New Prepayment Fears, Concentration of Borrower Refi and Servicer Risk
March 26, 2004
The unanticipated drop in mortgage rates this year has radically changed the complexion of the mortgage market and revived the prepayment bugaboo that stalked the MBS arena in 2003. Fixed-rate mortgages with 30-year terms have dropped 50 basis points since January and sparked a new wave of refinance activity. “With these low interest rates, prepayment risk is most certainly higher now,