The majority of subprime loans are refinanced (cash out), meaning that borrowers are extracting equity from their homes. The purchase cohorts differ according to loan type. Specifically, the purchase ARM repayment risk multiplier is 1.06; conversely, the fixed multiplier is 0.97. This suggests that the hybrid ARM purchase borrower demonstrates faster turnover than the cash-out borrower, whereas the fixed rate purchase borrower exhibits a slower turnover.
Rate and term (no cash out) hybrid ARM and fixed rate borrowers exhibit lower voluntary repayment multipliers of 0.89, and 0.83, respectively. This suggests that rate and term borrowers refinance based on an
expectation of living in their homes for a longer period than either refinance cash out or purchase cohort.