Dr. Healy's Monthly Prepay Analysis – June 2026

As market uncertainty continues to shape borrower behavior, understanding prepayment trends has never been more important. In this month's analysis, Dr. Thomas Healy shares his observations on mortgage prepayment speeds, interest rate movements, and the economic factors influencing the market.

Prepay Observation:

Speeds were essentially flat this month with the exception of Governments, which were down. Interestingly, the lower coupons showed a bit of an increase, while the higher coupons experienced drops. The overall theme for the month remains volatility. The Iranian War/cease fire, gas prices, China/Taiwan, tariffs, Russia/Ukraine are all contributing to a great uncertainty as to what is coming next. Mortgage rates were down slightly from May 31st. Inflation continues to be high, but we have a new Fed chairman who is supposed to get it under control. Rates have again started to climb since this June 30th report.

The average coupon of all loans outstanding in this database ($5.8T) is 4.36% and 78% of all mortgages have coupons under 6.00%. However, four dynamics have appeared:

1. Some borrowers are tiring of hanging on to their low-rate mortgages and succumbing to demographic pressures (new home, job transfer, etc.) to refi
2. Cash-out refis seem to be growing in popularity with approximately 10% of all new loans falling into this category
3. 1/7th of the outstanding loans are now close to or "in the money" (i.e. >= 6.0%)
4. Rates have decreased 5 bps in the last month. It is unclear where they are going from here

Stay Ahead of the Market: At Level1Analytics®, we track market dynamics in real-time to help institutions make informed portfolio decisions. Interested in learning more?

Explore Our Valuation Solutions

PROPRIETARY AND CONFIDENTIAL INFORMATION INTRAPRISE SOLUTIONS, INC. COPYRIGHT 2026 - ALL RIGHTS RESERVED