Prepay Commentary

February SBA Prepayment Speeds



February 14, 2018

 

Overall speeds for SBA pools increased last month by modest amounts, with slightly faster speeds than the prior month for equipment loan pools and smaller declines for longer-amortization real-estate pools. While month-over-month variations exceeded those seen since October, prepayment speeds remained consistent in terms of both overall levels and seasoning related patterns and are significantly faster than those observed prior to the cash flow distribution methodology changes implemented by the SBA in October.

While the prepayment speed impact of  cash flow distribution methodology changes dwarfs other factors, other sources continue to influence prepayment trends. As day count and statistical noise exert themselves in the form of monthly variations, economic influences, including changes in yield curve shape, the rate of inflation, and the pace of economic growth, sway long-term prepayment trends. Moving averages smooth out much of the statistical noise and, as the major prepayment shift caused by the October change becomes more distant, will better reveal long term prepayment trends.

 

Strategic Insight: Four Months In, SBA Prepayments

 

SBA Prepayment Tables (Click for Details)

Prepared according to methodologies described by SIFMA.

 

 

 

 

 

 

 

 

 

 



James Plunkett

Director of Investment Product Strategies

Vining Sparks


Amanda Noa

Vining Sparks


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