The weighted-average gross interest rates of the pool of mortgages that underlie a mortgage-backed security (MBS) at the time the securities were issued. A mortgage-backed security's current WAC can differ from its original WAC as the underlying mortgages pay down at different speeds. In the weighted-average calculation, the principal balance of each underlying mortgage is used as the weighting factor.
Weighted Average Life (WAC)
The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, WAL tells how many years it will take to pay half of the outstanding principal.
Weighted Average Maturity (WAM)
The weighted average of the time until all maturities on mortgages in a mortgage-backed security (MBS) are repaid. The higher the weighted average to maturity, the longer the mortgages in the security have until maturity. Also known as "average effective maturity".
A term used to distinguish between an original mortgage loan and a pass-through security.