Excess Spread

Business, Legal & Accounting Glossary

Definition: Excess Spread


Excess Spread


Full Definition of Excess Spread


Surplus income from an asset-based security (such as a bond). It is the difference between the interest received by the security-issuer on the mortgages sold and the interest paid to the security holders. For example, alt-a and subprime mortgages are sold at interest rates higher than those for prime mortgages and therefore generate extra cash flow for the mortgagee. This excess is usually deposited into a reserve account and serves as a first line of protection for the security holders against losses. It is a type of internal credit enhancement. also called excess interest cash flow.


Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/excess-spread/
Modern Language Association (MLA):
Excess Spread. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
December 01, 2022 https://payrollheaven.com/define/excess-spread/.
Chicago Manual of Style (CMS):
Excess Spread. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
https://payrollheaven.com/define/excess-spread/ (accessed: December 01, 2022).
American Psychological Association (APA):
Excess Spread. PayrollHeaven.com. Retrieved December 01, 2022
, from PayrollHeaven.com website: https://payrollheaven.com/define/excess-spread/

Definition Sources


Definitions for Excess Spread are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 20th November, 2021 | 0 Views.