A mortgage pool was created six years ago.Which one of the following PSA values is most apt to apply to that pool if market mortgage rates have been declining quite rapidly over the past five years?

Question

Quizplus · Accepted Answer

When market mortgage rates decline rapidly, prepayment speeds tend to increase as borrowers refinance to take advantage of lower rates. A PSA value of 200 indicates a prepayment speed that is twice the standard benchmark, which is likely in a declining rate environment.

A Mortgage Pool Was Created Six Years Ago