Refinancing Incentive
From Open Risk Manual
Revision as of 15:05, 1 December 2022 by Wiki admin (talk | contribs)
Definition
Refinancing Incentive is the economic incentive of a Borrower to Refinance an existing borrowing with a new contract. The refinancing incentive is a key driver of Prepayment Risk
Measurement
The measurement of the refinancing incentive invariably focuses on the net present value savings obtained when refinancing a loan with an existing applicable interest rate 
to a new loan at the current rate 
