As interest rates declined, we had net realized and unrealized gains on specified pools as both prices and pay-ups increased, but these were offset by net losses from our interest rate hedges and other activities.
While pay-ups on specified pools did increase as prepayment protection became more valuable in light of lower interest rates, the increase in pay-ups was not enough to compensate for the effects of yield spread widening.
Over the course of the first quarter, average pay-ups on our specified pools increased to 0.88% as of March 31, 2016 from 0.64% as of December 31, 2015.
Not only did the lower price bring in more than twice the total orders and just about twice the net profit ratio, but the percentage of pay-ups
Treasuries, but pay-ups
on Agency specified pools increased as interest rates fell and market perception of prepayment risk rose.
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on specified pools also declined during the quarter as interest rates rose, and as the dealer community became increasingly reluctant to hold inventory into the end of the year.
I know an iron-clad guarantee is part of the "emphasizing low risk" marketing platform that I said could lead to lower pay-ups on bill-me's in some markets.
Over the years while I was executive director of the newsletter association nothing we could do to our conversion series ever changed our pay-up rate on bill-me orders from about 67 percent.
on specified pools also declined during the quarter as interest rates rose and prepayments declined, and as the dealer community became increasingly reluctant to hold inventory into the end of the year.
Publishers I've spoken with have widely different reports on eventual pay-ups
. On the whole, the experience seems to be that bill-me orders received from Fortune 500 companies and "institutions" are pretty certain pay-ups
, but otherwise results can vary.