Prepayment risk: Difference between revisions
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imported>Doug Williamson (Expand.) |
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== See also == | == See also == | ||
* [[Early Repayment Charge]] | |||
* [[Extension risk]] | * [[Extension risk]] | ||
* [[Interest rate risk]] | * [[Interest rate risk]] | ||
Latest revision as of 16:44, 13 November 2016
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 - optional prepayments by customers of its fixed interest rate product.
