In mortgage-backed securities (抵押贷款支持债券s), this is the percentage of the principal amount of mortgages that are ppaid in a given month. For investors of 抵押贷款支持债券s, ppayment of mortgages is usually undesirable since future interest is foregone.
This is more broadly referred to as "ppayment risk." Due to the importance of ppayment risk, single monthly mortality was developed as a metric for tracking ppayments in the mortgage pool.
|||Prepayment hinders the returns for 抵押贷款支持债券 investors because mortgages are normally ppaid using refinancing loan, and this happens primarily when interest rates have fallen. So while an investor in an 抵押贷款支持债券 believes they have locked in a higher yielding investment in a low rate environment, they may in fact have the carpet pulled out from under them. The mortgage holders in the 抵押贷款支持债券 may refinance at lower interest rates, and then pay off the mortgage in the 抵押贷款支持债券 pool. Now the investor has their money back and must reinvest the funds in a lower interest rate environment.