Constant Default Rate

Constant default rate is an annualized measure used to describe the rate at which loans in a pool default.

Why this matters to income investors

More borrower defaults can reduce mortgage cash flow and increase losses.

How to use constant default rate in your research

Read the underlying loan and security disclosures. Check repayment speed, credit losses, financing, and payment priority because each can change the cash income available to investors.

This material is general education and information, not individualized investment, tax, or legal advice.