mortgages A mortgage loan or simply mortgage (), in civil law jurisdicions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any ...

, refinancing burnout is the tendency for prepayments to drop after rates fall, rise, and fall again. In other words, when

interest rate An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, ...

s keep on dropping, those who can benefit by taking advantages of

refinancing Refinancing is the replacement of an existing debt obligation with another debt obligation under a different term and interest rate. The terms and conditions of refinancing may vary widely by country, province, or state, based on several economic ...

will have done so already when rates declined in previous periods and this prepayment behavior is called refinancing burnout.

References

* ''Collateralized Mortgage Obligations: Structures and Analysis'' by Frank Fabozzi * ''Pricing Mortgage backed securities using prepayment functions and pathwise Monte Carlo Simulation'' by Osman Acheampong * ''Bond Portfolio Management'' by Frank Fabozzi * http://www.investopedia.com/terms/b/burnout.asp {{DEFAULTSORT:Refinancing Burnout Mortgage industry of the United States