Constant/Conditional Prepayment Rate (CPR) Calculator


About Constant/Conditional Prepayment Rate (CPR) Calculator (Formula)

The Constant/Conditional Prepayment Rate (CPR) Calculator is a tool used to determine the rate at which borrowers prepay their mortgages on a monthly basis.

It is commonly used in the analysis of mortgage-backed securities and is an important metric for investors and analysts to consider when assessing the potential risk and return of these investments.

The CPR is calculated using the formula:

CPR = Annualized Rate of Monthly Prepayments / Outstanding Balance

This formula takes into account the rate at which borrowers are paying off their mortgages each month, as well as the outstanding balance of the mortgages, to give a snapshot of the prepayment activity in the underlying pool of mortgages.

The CPR is expressed as a percentage and can be used to compare the prepayment activity of different pools of mortgages, as well as to project future cash flows for a given pool of mortgages.

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