NEW YORK - Prepayment rates for subprime and high loan-to-value mortgages rose in June, Credit Suisse First Boston reported Tuesday.
The average constant prepayment rate, or CPR, for subprime loans increased by 4 percentage points, to between 25% and 30%, for loans originated since 1995, the company said. The largest increases were for loans made after 1998.
The CPR for adjustable-rate subprime mortgages also rose; the lowest rate was 26%, for loans originated in 2000. The highest was 42%, for loans originated in 1998.
Prepayments for high-loan-to-value loans, which raise borrowers' debt levels beyond the value of their homes, also increased. Loans made between 1997 and 1999 reached a CPR range of 28% to 36%.
Rod Dubitsky, a vice president of asset-backed research at CS First Boston, said prepayment rates are up because of lower mortgage rates and high real estate prices, which are allowing borrowers to tap into the equity in their homes and refinance their current mortgages at better rates.
"Borrowers are looking at where real estate prices are, and are looking at where interest rates are, and finding that it is an optimal time to refinance," Mr. Dubitsky said in an interview. Prepayments should continue to remain high, if not rise, he said, for several months.