The percentage of loans that paid off on their balloon date hit 49.6% in August, rebounding sharply from July's 12-month low of 26%, according to analytics firm Trepp.

The August reading is the second highest in 2012, surpassed only by the 61.6% posted in February.

In many ways, Trepp says, the improving payoff rate is expected. For the first half of the year, many of the five-year loans originated in 2007 reached their balloon date, as the vast majority of these loans were made in the first six months of 2007. Most of these loans have had difficulty refinancing, which led to a huge dip in the percentage of loans paying off over the last few months.

Loans reaching their maturity date throughout the rest of 2012 are heavily skewed to earlier vintages. Loans from those periods were made with lower leverage and more reasonable valuations.

“The result should be better payoff numbers — much like August's — in the coming months,” analysts at Trepp say.

The August payoff figure of 49.6% is well above the 12-month average of 42.4%.

By loan count, as opposed to balance, 56.3% of loans paid off in the month. On that same basis, the 12-month rolling average is 53.3%.

Prior to 2008, the monthly payoff percentages were typically well north of 70%. Since the beginning of 2009, however, only four months saw more than half of the balance of loans reaching their balloon date payoff.

jhilley@housingwire.com