Rising mortgage rates and continued home price appreciation over the past 24 months has led to a slowdown in housing turnover and refinancing activity, pushing mortgage prepayment speeds to historically low levels. Solar loan prepayment rates have fallen in tandem, as home sales and cash-out refis have historically been two of the main solar prepay drivers. For securitized asset classes with positive excess spread, a slowdown in prepayment speeds can have positive credit implications as it increases soft credit enhancement. However, for solar loan ABS transactions, which typically have negative excess spread, low prepayment rates erode credit enhancement.

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Doc ID: 1003602

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