SBA Prepay Commentary
January 2022 SBA Prepayment Speeds
Prepayment speeds on equipment loan pools increased for the ninth time in ten months while those for real-estate loan pools slowed. Concerns over inflation among small business owners continue to mount. As reported by the NFIB, 22% of respondents list inflation as the single most important problem, the highest percentage since 1981. To give some context about how quickly inflation-related worries are rising, only 1% of respondents listed it as their primary concern in the NFIB’s survey one year ago. For the month of December, 48% of owners reported raising compensation, and 32% said they plan on raising wages within the next three months. These raises correspond not only with inflation concerns, but also those over cost of labor, which rose from 9% to 13% of respondents’ primary problem over the last month.
Equipment loan pools’ prepayments increased from 15.6 to 17.2 CPR, which was reflected among all individual vintages. Prepayments on real-estate loan pools slightly slowed from 15.4 to 15.3 CPR, though results were more mixed when viewed on a vintage-by-vintage basis.
Equipment Loan Pool CPRs
- All individual vintages experienced an increase in prepayments in the month of December.
- The largest of these increases was seen in the 2012 vintage, which went from 21.7 to 63.6 CPR.
- Most newer vintages are prepaying above their respective 6- and 12-month averages while older ones are a bit mixed when comparing to said averages.
|1Equipment loan pools have original WAMs between 8 and 13 years|
Real-Estate Loan Pool CPRs
- Increases/decreases were evenly mixed when viewed on a vintage-by-vintage basis.
- The largest increase was experienced by the 2008 vintage, which went from 4.0 to 14.4 CPR. The largest decrease was seen by the 2016 vintage, which went from 34.4 to 21.5 CPR.
- Most vintages are still prepaying above their respective 12-month averages, though results are a bit more mixed when comparing to their 6-month figures.
|2Real-estate loan pools have original WAMs greater than 18 years|
Prepared according to methodologies described by SIFMA.
Other Helpful Links
Weekly Sector Update | Weekly, Monday
Market Today | Daily
Weekly Recap | Weekly, Friday
Brokered Deposit Rate Indications | Weekly, Monday
Vining Sparks Interest Rate Products Weekly Commentary | Weekly, Monday
Investment Alternatives Matrix | Weekly, Tuesday
MBS Prepay Commentary (January) | Monthly, 5th business day
NFIB Small Business Economic Trends (December) | Monthly, 2nd Tuesday of each month
Analyst, Investment Product Strategies
Kevin A. Smith, CFA
SVP, Director Investment Product Strategies