The percentage of commercial loans that paid off at their maturity date rebounded in November, an improvement that probably won’t continue next year, according to a Trepp report released Wednesday.
In November, 47.1% of loans that reached their balloon date paid off, up from 41.8% in October. The percentage is in terms of dollar volume.
So far in 2011, the average monthly rate is 41%, a reflection of an improvement in the lending environment in the first half of the year that allowed 2006 five-year balloon loans to refinance, the analytics firm reported. The average monthly rate in 2010 was 34%.
However, Trepp said it doesn’t expect a similar improvement throughout the next 12 months because starting in January, the first of the 2007 five-year balloon loans will come due. The 2007 loans will be harder to refinance than the 2006 five-year balloon loans for numerous reasons, including the tightened lending environment.
“While the number may be bumped higher or lower from month to month, we don’t anticipate the average getting higher than its current level,” Trepp said.
The November percentage of 47.1% was higher than the 12-month rolling average of 45.1%.
Prior to 2008, the payoff percentages were typically above 70%. Since the beginning of 2009, however, there have only been three months where more than half of the balance of the loans reaching their balloon date paid off.
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