Weighted average maturity (WAM)
Asset-Backed Securities glossary · Collateral & Cash Flow Modeling
Definition
The principal-weighted average time to final maturity across the receivables in a pool.
Weighted average maturity (WAM) in plain English
Weighted average maturity is the typical time until the loans in a pool hit their FINAL due date — the day the very last payment is contractually owed. When you bundle thousands of loans together (car loans, mortgages, credit-card balances), some end sooner and some later, so WAM blends those end-dates into one representative number, giving bigger loans more say. If you're holding a stack of IOUs due in 2, 4, and 6 years, WAM tells you roughly when the whole stack finishes. It's close cousin to weighted average life, but WAL cares about when principal actually flows back (including early payoffs), while WAM just looks at the official finish line.
Also called: WAM
Practice Weighted average maturity (WAM)
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