Other Loan Characteristics May Explain Differences Between IO, Amortizing Prepayments, Study Finds
April 13, 2006
Fixed-rate mortgages with interest-only features do not necessarily prepay faster than normally amortizing loans, and the differences in the IO prepayment speeds may be due to other factors, according to a new analysis by RBS Greenwich Capital. In the report, “Fixed-Rate IO Loan Prepayments,” RBS Greenwich analysts tried to see whether or not the IO component alone influenced prepayment speeds. The report found that loan size, geography, and FICO score can explain why fixed-rate…