Constant/Conditional Prepayment Rate Calculator
The Constant/Conditional Prepayment Rate (CPR) Calculator is a tool used in mortgage-backed securities analysis to estimate the rate at which borrowers will prepay their mortgage loans. The CPR represents the percentage of the outstanding mortgage balance that is prepaid in a given period.
CPR = Annualized Rate of Monthly Prepayments / Outstanding Balance
If the annualized rate of monthly prepayments is 0.05 (or 5%) and the outstanding balance is $200,000, the CPR would be calculated as follows: CPR = 0.05 / $200,000 = 0.00025 or 0.025%