Prepayment speed
Also called speed, the estimated rate at which mortgagors pay off their loans ahead of schedule, critical in assessing the value of mortgage pass-through securities. |
Similar financial terms
Zero prepayment assumptionThe assumption of payment of scheduled principal and interest with no payments.
Prepayments
Payments made in excess of scheduled mortgage principal repayments.
Lag response of prepayments
There is typically a lag of about three months between the time the weighted average coupon of an MBS pool has crossed the threshold for refinancing and an acceleration in prepayment speed is observed.
