Assume the mortgage interest deduction is abolished.

What do you think would happen to mortgage prepayment speeds (faster or slower?), and why?

Assume current mortgage rates are at 4%. The day of the announcement, what do you think would happen to the price of a fixed-rate passthrough MBS with a 6% coupon (Rise or fall?)? What about an MBS with a 3% coupon (Rise or fall)?

What do you think would happen to the size of new loans that are originated after the announcement (Increase or decrease?)? Going forward, would this likely increase or decrease the interest rate sensitivity of prepayments?

There are no actual numeric computations; please only list whether or not each item will rise or fall.