Tags: Bank loan, Bob Coleman, Coleman Report, dodd frank, franchise lending, Main Street, SBA, SBA Lending, Small Business, Small Business Lending, small business loan, sme lending
November 19, 2013
By Bob Judge
Editor, CPR Report
In September prepays fell back to 7% after a one month visit above 8%. However, this reading represents the 5th month in a row of 7% or higher prepays.
This month saw double-digit percentage decreases in both defaults and voluntary prepayments, leading to a near CPR 2% decrease in overall speeds.
As for the detail, overall prepayments fell 20.58% to 7.01% from 8.83% in August.
In comparing prepayment speeds for the first nine months of 2013 to the same period in 2012, we see that this year is now running 29% ahead of last year, with YTD CPRs at 7.16% versus 5.57%.
As for the largest sector of the market, 20+ years to maturity, prepayment speeds fell by 24% to 6.13% from 8.11%.
Turning to the CPR breakdown, the default CPR fell by 16% to 1.77% from 2.10%. This level is the sixth lowest since September, 1999 when our records began.
Regarding voluntary prepayments, they remain range bound in the 5-6% area, coming in at 5.25% from 6.73% in August.
Preliminary data for next month suggests that voluntary prepayments will remain near this month’s levels and overall CPRs will stay near 7% for at least another month.
Turning to the default/ voluntary prepayment breakdown, the Voluntary Prepay CPR (green line) fell to 5.25% from 6.73%, a 22% decrease. While the VCPR fell below 6%, the Default CPR (red line) decreased by 16% to 1.77% from 2.10% the previous month.
Prepayment speeds fell in five out of six maturity categories. Decreases were seen, by order of magnitude, in the 20+ sector (-24% to CPR 6.13%), 10-13 (-22% to CPR 7.90%), 16-20 (-21% to CPR 10.19%), 13-16 (-12% to CPR 6.40%) and <8 (-6% to CPR 10.34%).
The lone increase was seen in 8-10, which rose by 55% to CPR 11.12%.
Three-quarters of the way through 2013 and the thesis remains the same. We are locked in a 7% to 8% range for prepayment speeds. As long as voluntary prepayments don’t begin rising again, we should remain here well into 2014.
