When interest rates are falling, many debt issuers will refinance their mortgages to take advantage of the new lower rates. Generally, when interest rates decline, prepayments accelerate beyond the initial pricing assumptions, which causes the average life and maturity of the security to shorten. In many instances, prepayment risk can cause reinvestment risk, which occurs when the funds returned to you must be reinvested at new, lower interest rates. Prepayment risk is also known as call risk.