Prepayment risk applies to MBS and ABS and is the reduction of the fund's WART due to homeowners or other debtors refinancing their loans or making early unscheduled payments. These repayments effectively shorten the average maturity of a portfolio and change its risk profile. This is especially a risk in an environment of declining interest rates. As mortgages, for example, are refinanced, the original loans are completely paid off and replaced with a new, lower-interest rate loan. Funds holding MBS with the original mortgage will no longer receive cash flows from that homeowner.