June 13, 2017
By Bob Judge
Editor, CPR Report
SBA Hot Topic Tuesday — 7(a) Prepays Go Back Above 9%
In April, prepays rose by 42%, going back above CPR 9% after a two month respite.
An increase in both voluntary prepayments (CRR) and defaults (CDR) lead to the rise in the CPR.
Specifically, voluntary prepayments rose by 37% to CRR 8.04% while defaults moved up by 70% to CDR 1.53% versus March results.
For the record, defaults have remained below CDR 2% for 44 months in a row.
In comparing YOY prepayment speeds for 2017 versus 2016, this year is running 14% (8.29% vs. 7.28%) above last year after four months.
As for the largest sector of the market, 20+ years to maturity, prepayment speeds rose by 33% to 9.05% from 6.80% previously.
Preliminary data for next month suggests that prepayments will fall a bit, but stay above 9% for a second month in a row.
Regarding our maturity buckets, prepayment speeds rose in all six maturity categories.
Increases were seen, by order of magnitude, in the 16-20 year sector (+177% to CPR 9.48%), <8 (+116% to CPR 27.42%), 13-16 (+49% to CPR 16.78%).