Refinancings are causing concern among investors in mortgage-backed securities. Many of the factors pointing to higher prepayments are already in place, and some observers are speculating that prepayments could match those of 1993's refinancing boom.

"We're going to have very volatile prepayments," said Paul C. Wang, senior vice president for fixed-income research at Prudential Securities. "It's very likely that we're going to hit a 25-year low in mortgage rates," he added.

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