When prepayments occur at 1.5 times the benchmark rate, how is it described in terms of PSA?

When prepayments occur at 1.5 times the benchmark rate, it is described as 150% PSA. The Public Securities Association (PSA) model is a standard benchmark used in the mortgage-backed securities market to measure prepayment speeds. A PSA of 100% reflects the baseline prepayment speed, which is based on a projected model of how and when mortgage holders are likely to prepay their loans.

In this context, if prepayments are occurring at 1.5 times the benchmark rate, it indicates that the rate of prepayments is 50% higher than the standard or expected rate. Thus, it is categorized as 150% PSA, indicating that the actual prepayment behavior is significantly more aggressive than the baseline model forecasts. This can have implications for investors holding mortgage-backed securities, as higher prepayment rates can lead to a faster return of principal and impact the overall yield of the investment.