When interest rates fall, mortgage prepayments ________, and when interest rates rise, mortgage prepayments ________.

Question

Quizplus · Accepted Answer

When interest rates fall, homeowners are more likely to refinance their mortgages at lower rates, leading to an increase in mortgage prepayments. Conversely, when interest rates rise, homeowners are less likely to refinance and may also be less likely to sell their homes, leading to a decrease in mortgage prepayments.

When Interest Rates Fall, Mortgage Prepayments ________, and When Interest