New Refinance Lag Functionality Affords RiskSpan Users Flexibility in Higher Rate Environments
Getting this time lag right unveils a more accurate understanding of the rate incentive that borrowers responded to and thus better predictions of coming prepayments.
ARLINGTON, Va., Sept. 29, 2022 /PRNewswire/ -- RiskSpan, a leading technology company and the most comprehensive source for data management and analytics for residential mortgage and structured products, has announced that users of its award-winning Edge Platform can now fine tune the assumed time lag between a rate-incentivized borrower's decision to refinance and ultimate payoff. Getting this time lag right unveils a more accurate understanding of the rate incentive that borrowers responded to and thus better predictions of coming prepayments.
The recent run-up in interest rates has caused the number of rate-incentivized mortgage refinancings to fall precipitously. Newfound operational capacity at many lenders, created by this drop in volume, means that new mortgages can now be closed in fewer days than were necessary at the height of the refi boom. This "lag time" between when a mortgage borrower becomes in-the-money to refinance and when the loan actually closes is an important consideration for MBS traders and analysts seeking to model and predict prepayment performance.
Rather than confining MBS traders to a single, pre-set lag time assumption, users of the Edge Platform's Historical Performance module can now adjust the lag assumption when building their S-curves to better reflect their view of current market conditions. Using the module's new Input section for Agency datasets, traders and analysts can further refine their approach to computing refi incentive by selecting the prevailing mortgage rate measure for any given sector (e.g., FH 30Y PMMS, MBA FH 30Y, FH 15Y PMMS and FH 5/1 PMMS) and adjusting the lag time to anywhere from zero to 99 days.
Comprehensive details of this and other new capabilities are available by requesting a no-obligation live demo at riskspan.com.
This new functionality is the latest in a series of enhancements that is making the Edge Platform increasingly indispensable for Agency MBS traders and investors.
RiskSpan offers cloud-native SaaS analytics for on-demand market risk, credit risk, pricing and trading. With our data science experts and technologists, we are the leader in data as a service and end-to-end solutions for loan-level data management and analytics.
Our mission is to be the most trusted and comprehensive source of data and analytics for loans and structured finance investments.
Rethink loan and structured finance data. Rethink your analytics. Learn more at www.riskspan.com.
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SOURCE RiskSpan, Inc.
