According to the just-released Trepp June 2012 Pay-Off Report, the percentage of loans paying off on their balloon date remained anchored near its 12 month low. In May, the rate plummeted to 29.4 percent, the lowest level since October 2010. In June, the rate ticked up but the gain was marginal, indicating that despite historically low interest rates, the ability for borrowers to refinance remains challenging. In June, only 32.3 percent of loans reaching their balloon date paid off. This is the second lowest total in 21 months. Only May 2012 was lower.
The June total of 32.4 percent was well under the 12 month average of 42.7 percent. (This number simply sums the averages of each month and divides by 12--there was no balance weighting across the months.)
By loan count (as opposed to balance), 55.2 percent of the loans paid off. On the basis of loan count, the 12 month rolling average is now 51.8 percent. The disparity between the volume-based total and the count-based total indicates that it was mostly small balance loans that managed to pay off in June.
Prior to 2008, the pay-off percentages were typically well north of 70 percent. Since the beginning of 2009, however, there have only been four months where more than half of the balance of the loans reaching their balloon date actually paid off.