Weighted Average Remaining Term - WART


DEFINITION of 'Weighted Average Remaining Term - WART'

The remaining life of an asset-backed security or a mortgage-backed security. It is measured in months, and is used to denote the remaining maturity of the mortgages or assets that comprise a pool. The weighting factor used in calculating this average is the balance of each mortgage loan in the pool. Also known as weighted average maturity.

BREAKING DOWN 'Weighted Average Remaining Term - WART'

The weighted average remaining term is affected by prepayments of the mortgages included in the mortgage-backed security. Therefore, if prepayment is high, the weighted average remaining term would decrease. The prepayment rate measures how quickly home owners pay off their mortgage, a metric which depends on market interest rates.

  1. Collateralized Mortgage Obligation ...

    A type of mortgage-backed security in which principal repayments ...
  2. Collateralized Debt Obligation ...

    An investment-grade security backed by a pool of bonds, loans ...
  3. Mortgage Pool

    A group of mortgages held in trust as collateral for the issuance ...
  4. Weighted Average Maturity - WAM

    The weighted average of the time until all maturities on mortgages ...
  5. Mortgage-Backed Security (MBS)

    A type of asset-backed security that is secured by a mortgage ...
  6. Hedge

    Making an investment to reduce the risk of adverse price movements ...
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