In this report, we leverage our own data and focus on the voluntary prepayment activity of our floating- and fixed-rate K-Deals® over a 12-month period ending in June 2024. During more normal market conditions, prepayments are generally higher among more seasoned loans, as well as when prepayment premiums are lowest, but in the current higher interest rate environment, we are seeing prepayment speeds are low among all loan segments.

Freddie Mac Multifamily introduced the KF series of floating-rate K-Deals to our securitization platform in October 2012. This offering provides borrowers with the ability to obtain financing indexed to lower, short-term rates along with more prepayment flexibility. Through June 2024, we have funded and securitized over 6,800 floating-rate loans totaling nearly $168 billion. Floating-rate loans offer borrowers more prepayment flexibility, with 95% choosing a one-year lockout followed by 1% prepayment premium.

Our fixed-rate prepayment analysis is based on three years of data from July 2021 through June 2024. Fixed-rate loan prepayments are minimal until the loans enter their open period, at which point prepayment speeds increase, although due to the higher interest rates those prepayment speeds are coming down as well.

Read the full report.

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