What is Semi Annual Bond Yield?
Semi Annual Bond Yield is the fraction of the remaining mortgage loan principal that is prepaid in a single month. Prepayments can occur when homeowners pay off their mortgage ahead of schedule, often due to refinancing, selling the home, or making extra payments. Conditional Prepayment Rate is an annualized measure of the prepayment rate for a loan pool. For investors in mortgage-backed securities, a higher SMM indicates a higher rate of prepayment, which can affect the expected cash flows and yields from these securities. Lenders and servicers monitor SMM to understand prepayment behaviors and manage the servicing of loans. Single Month Mortality is a crucial measure in the mortgage finance industry, indicating the percentage of the remaining principal that is prepaid in a single month. Derived from the Conditional Prepayment Rate, it helps investors and lenders assess prepayment risk and manage their portfolios effectively. Understanding SMM is essential for accurately forecasting cash flows.
How to Calculate Single Month Mortality?
Single Month Mortality calculator uses Single Month Morality = Prepayment for a Month/(Beginning Mortgage Balance for Month-Scheduled Principal Repayment for Month) to calculate the Single Month Morality, Single Month Mortality measures the percentage of the remaining principal of the mortgage loans that are expected to be prepaid in a given month. Single Month Morality is denoted by SMM symbol.
How to calculate Single Month Mortality using this online calculator? To use this online calculator for Single Month Mortality, enter Prepayment for a Month (PFM), Beginning Mortgage Balance for Month (BMBM) & Scheduled Principal Repayment for Month (SPR) and hit the calculate button. Here is how the Single Month Mortality calculation can be explained with given input values -> 1.294002 = 6580/(6030-945).