Prepayment Estimate Financial Glossary

What is it? A reasonable and supportable forecast of loan prepayments. In the case of a mortgage-backed security, it is the forecast of principal amortization caused by loan prepayments. A single prepayment estimate is associated with each projected interest rate environment. Estimates are used to forecast expected lives. Investors typically examine data for a range of prepayment estimates applicable to a range of preselected rate changes.

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