Agency mortgage-backed security prepayment speeds increased in February with much of the refinance activity coming from newer loans and those with high coupons, a report from Keefe, Bruyette & Woods said.

For February, there was a 10% increase in prepayment speeds for 30-year fixed-rate mortgages to a 7.2 constant prepayment rate from a 6.6 CPR in January. The pickup was driven by the rally in mortgage rates during December and the corresponding increase in refinance applications (as measured by the Mortgage Bankers Association) in early January, KBW said. The absolute level of refinance activity remains very low, the report added.

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