New
York, NY, May 12, 2014 – Trepp reports the percentage of loans paying off on
their balloon date was 63.6% in April, just one point lower than the March
reading of 64.6%. Although April marked the fifth straight month in which the
rate declined, the decrease was much smaller than the previous four months,
during which the payoff rate fell from 81.3% to 64.6%.
The
April payoff percentage was lower than the 12-month moving average of 69.5%.
This number sums the averages of each month and divides by 12--there was no
balance weighting across the months. The November 2013 reading was the highest
rate in the last five years, at 81.3%. (Trepp began measuring this statistic in
August 2008.)
By
loan count (as opposed to balance), 67.0% of loans paid off in April. That was
an increase from March, which was 64.8% on this basis. The 12-month rolling
average by loan count is now 69.6%.
The
ongoing decline could be a result of adverse selection from the loans that have
remained outstanding until maturity. A large percentage of the loans due to
mature in April were from the 2004 vintage.
With
interest rates and spreads so low in recent years, it is quite possible that
the higher quality loans paid off as soon as they came out of lockout, which
could have left the more marginal properties outstanding. Those properties, of
course, would have the hardest time finding refinancing.
For a complete copy of the
company’s news release, please contact:
Eric
Gerard
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