Monday, May 12, 2014

Trepp April Payoff Report: Percentage of Loans Paying at Maturity Levels Off

                

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

No comments: