It is clear that some tuning is needed to account for this noticeable slowdown in turnover. By adjusting the turnover tuning parameter in the model from 1.0 to 0.85, we are able reduce this over-prediction from an average of about 2.0 CPR in the graph above to an average of 0.5 CPR in the graph below.

We are officially recommending that for the foreseeable future, all users should adjust all AD&Co. 30 year FNMA, FHLMC and Jumbo Prime models in v5.1 and later to a turnover tuning setting of 0.85. We will continue to track the turnover component of the model, and will remove the tuning recommendation when we feel it is no longer needed.

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