The measure is CPR, the conditional prepayment rate, an annualised percentage of the remaining pool expected to prepay. It responds to the refinancing incentive, to seasoning, to housing turnover and to the burnout of borrowers who already refinanced.
Prepayment is why an MBS behaves like a callable-bond. Falling rates return your principal for reinvestment at the new lower rate, which is textbook reinvestment-risk, and it is the reason MBS trade at a spread over Treasuries even with a government guarantee.
Example: a pool at 8% CPR sees roughly 8% of remaining balance prepay in a year. Rates fall 75 basis points, CPR jumps to 35%, and a pool bought at 103 hands back principal at 100, destroying three points of premium.
Related: mortgage-backed-security, extension-risk, negative-convexity, reinvestment-risk, callable-bond