Weighted Average Remaining Term - WART

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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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
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  2. Collateralized Debt Obligation ...

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  3. Mortgage Pool

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  4. Mortgage-Backed Security (MBS)

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  5. Weighted Average Maturity - WAM

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  6. Collateralized Loan Obligation ...

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