B is correct. A decrease in the average loan-to-value ratio is likely to cause curtailments, which are partial prepayments, therefore increasing prepayments. A decrease in defaults usually decreases prepayments, as there would be fewer loans that are paid off early due to default. An increase in market interest rates typically leads to a decrease in prepayments, as borrowers are less likely to refinance their mortgages when rates are higher. An increase in the supply of new houses can decrease the value of existing houses, which may slow down refinancing activity for drawing on home equity, thus reducing prepayments.