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Threshold for Refinancing

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Threshold for refinancing
The point when the weighted-average coupon of an MBS is at a level to induce homeowners to prepay the mortgage in order to refinance to a lower-rate mortgage, generally reached when the weighted-average coupon of the MBS is 2 percentage points or more above currently available mortgage rates.

Threshold for Refinancing
The interest rate on a mortgage or a mortgage-backed security that is high enough to encourage property owners to refinance their mortgages at lower rates. If enough property owners refinance, this may affect the yield on a mortgage-backed security, depending upon its particular type. Generally speaking, the threshold for refinancing is two percentage points above prevailing interest rates.


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