Prepay Speed Trend Observation

Speeds seem to be on a slow but erratic upward trajectory. The average coupon of all loans outstanding in this database ($6.6T) is 3.90% and 97% of all mortgages have coupons under 7.00%.

However, I think we are starting to see some borrowers tiring of blindly hanging onto their low-rate mortgages. Demographic pressures (desire for a new home, job transfers, etc.), combined with a growing realization that rates are not coming down significantly in the near future, may be driving this. Despite that, in today’s 6.90+/-% (CF30) rate environment, payoffs should stay low for quite a while.

About Dr. Tom, CMB

Dr. Thomas J. Healy, CMB, Co-Founder & Chief Innovation Officer at Level1Analytics® Powered by Intraprise, has over 30 years of unmatched experience in financial valuation and value modeling. Prior to creating Level1Analytics, Dr. Healy held several executive-level positions at top lending institutions, notably working for David Rockefeller at Chase Manhattan Bank early in his career. Dr. Healy's experience extends beyond the US market; he has worked on assignments in Hong Kong, Bangalore, and Moscow.

Dr. Healy obtained his Bachelor of Science degree in Mathematics and Economics; Master’s degree in Business Administration, specializing in Banking; and a Doctorate degree in Business Administration with an emphasis on the business application of information technology. He holds the Certified Mortgage Banker designation. Receiving his doctorate at age 50, Dr. Healy passionately believes that continued, lifelong education is a powerful tool for success.

A Master Faculty Fellow and Dean of the Faculty of the Mortgage Bankers Association, Dr. Healy is a frequent lecturer and author on asset optimization topics to the financial services industry. His text on mortgage servicing rights, Servicing Portfolio Evaluation and Management: A Financial Perspective, published by the Mortgage Bankers Association, is in its second edition (2007).