Floating- and Fixed-Rate Prepayment Report, as of December 2022
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 December 2022. 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 December 2022, we have funded and securitized 6,444 floating-rate loans totaling over $156 billion. Floating-rate loans offer borrowers more prepayment flexibility, with 82% choosing a one-year lockout followed by 1% prepayment premium.
Our fixed-rate prepayment analysis1 is based on three years of data from December 2019 through December 2022. Fixed-rate loan prepayments are minimal until the loans enter their open period, at which point prepayment speeds increase.
1 The fixed-rate prepayment analysis has been updated as of January 2024 from the previous version released in June 2023 due to a data error. The timing of the data analyzed is unchanged.