Early repayment in securitisation is when a borrower pays off their loan before the agreed-upon maturity date. This can happen for a number of reasons, such as if the borrower has received a windfall of money or if they have refinanced their loan with another lender.
Early repayment can have a number of implications for securitisations. First, it can reduce the amount of interest income that the securitisation will receive. Second, it can increase the risk of dilution for investors, as the pool of assets will be smaller. Third, it can lead to changes in the securitisation's credit rating.
It is important for investors in securitisations to understand the implications of early repayment. They should carefully consider the risks and rewards before investing in a securitisation.