SBA Prepay Commentary
September 2021 SBA Prepayment Speeds
Prepayment speeds on equipment loan pools increased for the sixth straight month, while those for real-estate loan pools experienced their first decrease since March. As can be seen in the chart below, it appears that speeds may be following the seasonal trend of waning during the fall and winter months, albeit still at lower levels than recent pre-pandemic years. Availability and quality of labor is an increasing concern among small business owners, as reported by the NFIB, with 50% of business owners saying they have job openings they are unable to fill, topping last month’s 48-year record high. Inflation is another area of growing worry, as 13% of respondents listed it as the single most important problem facing their business.
Equipment loan pools’ prepayments increased slightly, going from 14.4 to 14.5 CPR, though results were more mixed on a vintage-by-vintage basis. Prepayments on real-estate loan pools declined for the first time in six months, decreasing from 14.5 to 13.4 CPR, though results were mixed among vintages.
Equipment Loan Pool CPRs
- Prepayments were mixed when comparing between vintages.
- The largest increase was seen by the 2012 vintage, which went from 51.0 to 73.2 CPR. The largest decrease was seen by the 2015 vintage, which went from 25.4 to 20.6 CPR.
- All vintages’ speeds were above their respective 6- and 12-month average speeds.
|1Equipment loan pools have original WAMs between 8 and 13 years|
Real-Estate Loan Pool CPRs
- Changes in prepayments were mixed on a vintage-by-vintage basis.
- The largest increase was experienced by the 2009 vintage, which went from 5.3 to 20.0 CPR. The largest decrease was experienced by the 2010 vintage, which declined from 25.6 to 15.4 CPR.
- Most vintages are still prepaying above their respective 6- 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