SBA Prepay Commentary

July 2020 SBA Prepayment Speeds

July 2020

As expected, July’s prepayments were low, continuing to buck the trend of higher speeds usually seen during summer months. Though there was a slight increase over prepayments last month, both Equipment and Real-Estate loan pools are still close to last month’s historic lows. The Paycheck Protection Program (PPP), which as of July 14 has provided loans to 4.9 million businesses with an average loan size of $105,194, recently had its application deadline extended from June 30 to August 8. This extension should help further reduce the number of defaults, at least for the time being, keeping prepayment speeds similarly low in the following months.

Equipment loan pools increased from 5.4 to 6.2 CPR, though results were mixed among vintages. After five months of declines, Real-Estate loan pools experienced their first increase, going from 5.6 to 6.3 CPR, though individual vintages again experienced mixed results.

Equipment Loan Pool CPRs

1Equipment loan pools have original WAMs between 8 and 13 years

Real-Estate Loan Pool CPRs

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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MBS Prepay Commentary (July) | Monthly, 5th business day

Kevin A. Smith, CFA

SVP, Director Investment Product Strategies

Vining Sparks

Adam Hofer

Analyst, Investment Product Strategies

Vining Sparks

The information included herein has been obtained from sources deemed reliable, but it is not in any way guaranteed, and it, together with any opinions expressed, is subject to change at any time. Any and all details offered in this publication are preliminary and are therefore subject to change at any time. This has been prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual or institution. This information is, by its very nature, incomplete and specifically lacks information critical to making final investment decisions. Investors should seek financial advice as to the appropriateness of investing in any securities or investment strategies mentioned or recommended. The accuracy of the financial projections is dependent on the occurrence of future events which cannot be assured; therefore, the actual results achieved during the projection period may vary from the projections. The firm may have positions, long or short, in any or all securities mentioned. Member FINRA/SIPC.
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