Burnout(redirected from Burn Outs)
Also found in: Dictionary, Medical, Encyclopedia, Wikipedia.
In a mortgage-backed security, the percentage of mortgages underlying the security that were not re-financed following a drop in interest rates. Historically, a mortgage that is not re-financed is less likely to re-finance at the next drop in interest rates. As a result, potential investors in mortgage-backed securities often look for a high burnout rate because it reduces prepayment risk, or the risk that investors will be deprived of future interest payments because too many mortgages are prepaid.