Definitions for "prepayment risk"
Keywords:  cmo, reinvest, gnma, refinanced, issuer
The possibility that homeowners will pay off their mortgage loans early, such...
The risk of loss of additional profits due to the early repayment of principal on a higher yielding debt instrument or loan, than could be obtained at current market prices (e.g., refinancing of mortgages when interest rates fall).
The risk that homeowners or consumers may repay mortgage or consumer loans, which may effect the yield of mortgage -- or asset-backed securities related to such loans.
The possibility that the mortgages underlying the security are repaid faster or more slowly than expected.