Passthrough Rate vs. WAC

Hi all,

I’m a little confused by the difference between the passthrough coupon rate and the weighted average coupon. If I were to create an amortization table which rate would I use as my interest rate? Or would they be used to calculate my monthly payments (like a coupon rate)?

Any help would be appreciated.


The passthrough coupon rate should be used to create amortization table. The difference between the WAC and the passthrough rate will be your fee for providing MBS.