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 2023. We look at prepayment speeds, lockout periods, seasoning and find that prepayments are generally highest when prepayment premiums are lowest and among more seasoned loans, and interest rates are low.

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 2023, we have funded and securitized 6,694 floating-rate loans totaling over $164 billion. Floating-rate loans offer borrowers more prepayment flexibility, with 81% choosing a one-year lockout followed by 1% prepayment premium.

Our fixed-rate prepayment analysis is based on three years of data from June 2020 through June 2023. Fixed-rate loan prepayments are minimal until the loans enter their open period, at which point prepayment speeds increase.

Read the full report.

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