Dictionary of Banking Terms: Conditional Prepayment Rate (CPR)
Conditional Prepayment Rate (CPR)
mortgage prepayment model in which the average monthly prepayment rate is annualized by multiplying by 12. CPR expresses prepayment as ratio of prepayments to outstandings, usually a percentage of the mortgage balance outstanding at the beginning of the year that will be prepaid that year. A variation is single monthly mortality, which expresses expected prepayments as a monthly rate. CPR is a predictor of cash flow yields from Collateralized Mortgage Obligation issues.
