Glossary BG Image

Glossary of Stock Market Terms

Browse Terms By Number or Letter:
Financial Terms By: p
PSA Prepayment Rate

The Bond Market Trade Association's Mortgaged Asset-Backed Securities Division's prepayment model based on an assumed rate of prepayment each month of the then unpaid principal balance of a pool of mortgages. PSA is used primarily to derive an implied prepayment speed of new production loans. 00% PSA assumes a prepayment rate of 2% per month in the first month following the date of issue, increasing at 2% percentage points per month thereafter until the 30th month. Thereafter, 100% PSA is the same as 6% CPR (Constant prepayment rate).

Copyright © 2018, Campbell R. Harvey. All Worldwide Rights Reserved. Do not reproduce without explicit permission.