In the theme of this release we take a closer look at the procedure used to generate prepayment rates on borrower group level. Since these rates are used as one of the main input in the estimation of the parameters for the prepayment functions, it is crucial that they are reliable.
Lately, we have made an effort to improve the generation procedure, which due to various data problems is not a trivial task. In this theme we examine some of the essential data problems connected with the generation of group level prepayment rates, and we explain how we cope with these. In many cases the explanations are supported by examples which we hope will help visualize both the problems and the solutions.