Prepayment risk

From ACT Wiki
Revision as of 18:48, 15 June 2014 by imported>Doug Williamson (Create the page. Source: IASB discussion paper DP/2014/1 p28 Accounting for dynamic risk management.)
(diff) ← Older revision | Latest revision (diff) | Newer revision → (diff)
Jump to navigationJump to search

Prepayment risk is a form of interest rate risk for a financial institution.

It arises from the non-contractual early repayment by customers of, for example, fixed rate mortgages.


The financial institution therefore has an interest rate exposure for the - as yet unknown - prepayments by customers of its fixed interest rate product.


See also