Prepayment Rate Surges; Servicers Drop Ball on Retaining Customers

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Posted To: MND NewsWire

Prepayment rates historically tend to increase in the spring, but this year they have been exceptionally high. The rate has risen during March in 18 of the past 19 years with an average gain of 21 percent. In its March Mortgage Monitor Black Knight says that prepayment activity increased by a total of 40 percent in February and March and in March alone by 28 percent. It was the largest increase in 2.5 years. While home sales are what usually drive spring increases, this time it is the softening of interest rates and a growth of refinancing. That means some significant differences in the prepayment rate across both investor types and loan vintages due to varying rate sensitivity. The rate is highest among portfolio lenders at an aggregate of 58 percent over the two months, and FHA/VA loans with…(read more)

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