SBA Prepay Commentary
January 2021 SBA Prepayment Speeds
In a time where the only thing to expect is the unexpected, SBA prepayment speeds did not disappoint. While the fall and winter seasons have historically been times of decreased prepayments, this year has seen speeds pick up over that period. Considering the increasing availability of the COVID-19 vaccine and another round of stimulus checks from the federal government, it would appear that business owners have begun feeling more confident in their future sales since the pandemic began, but their confidence has recently moderated and even slightly declined. If this continues to increase, said optimism would contribute to upward pressure on prepayments as speeds return to levels more in line with historical standards.
Equipment loan pools’ prepayments increased from 11.9 to 13.8 CPR, which includes pickups among every vintage. Real-estate loan pools also saw an increase, going from 11.0 to 12.3 CPR, though results were mixed on a vintage-by-vintage basis.
Equipment Loan Pool CPRs
- Every individual vintage saw an increase in prepayments over the last month.
- The largest increase was seen by the 2014 vintage, which rose from 11.7 to 25.0 CPR.
- Every vintage is now paying above its respective 6- and 12-month average speeds.
|1Equipment loan pools have original WAMs between 8 and 13 years|
Real-Estate Loan Pool CPRs
- Speeds for real-estate loan pools have now had increases for three of the last four months, reversing the downward trend they had been experiencing for most of 2020.
- Results among vintages were fairly evenly mixed, with both miniscule and substantial changes in both directions.
- The largest decrease was experienced by the 2011 vintage, which declined from 21.9 to 11.7 CPR. The largest increase was experienced by the 2013 vintage, which rose from 12.4 to 21.9 CPR.
- Results are also mixed among vintages when comparing to their 6-month and 12-month averages.
|2Real-estate loan pools have original WAMs greater than 18 years|
SBA Prepayment Tables (PDF)
Prepared according to methodologies described by SIFMA.
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Analyst, Investment Product Strategies
Kevin A. Smith, CFA
SVP, Director Investment Product Strategies