SBA Prepay Commentary
March 2021 SBA Prepayment Speeds
Prepayment speeds for March, reflecting activity in February, declined for the third time in four months, reflecting the continued uncertainty among small business owners. While February did see a slight uptick in the NFIB Small Business Optimism Index, going from 95.0 to 95.8, it was still lower than expected and is beneath the 47-year average of 98. Among such concerns are the impending cost and quality of labor, increased taxes, and government regulation. Given the $1.9 trillion stimulus package signed by President Biden on Thursday and the ever-increasing number of individuals vaccinated for COVID-19, one would expect concerns about poor sales to start to wane in future surveys. Combining these factors with the usual increase in prepayments in the spring and summer, and speeds may begin to ramp in the next few months.
Equipment loan pools’ prepayments decreased from 10.7 to 8.6 CPR; a trend reflected in almost every vintage. Speeds on real-estate loan pools also slowed, going from 10.5 to 7.2 CPR, though individual results were mixed across vintages.
Equipment Loan Pool CPRs
- Every vintage outside of 2013 and 2017 experienced a decrease in prepayments.
- The largest decrease was experienced by the 2014 vintage, which went from 13.4 to 9.1 CPR.
- Most vintages are below both their respective 6- and 12-month average speeds.
|1Equipment loan pools have original WAMs between 8 and 13 years|
Real-Estate Loan Pool CPRs
- Most vintages experienced a decrease in prepayments, with the exception being 2012, 2013, and 2014.
- The largest decrease was experienced by the 2011 vintage, which dropped from 14.7 to 5.2 CPR.
- Most vintages’ speeds are now below their respective 6-month averages, and results are a little more mixed when comparing to their 12-month averages.
|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 (March) | Monthly, 5th business day
Analyst, Investment Product Strategies
Kevin A. Smith, CFA
SVP, Director Investment Product Strategies