The Higher The Yield, The Better The Loan Payoff

There is a “tight correlation” between the debt yield on a loan and the likelihood the loan would pay off, according to Trepp, reports Housing Wire.

There is a “tight correlation” between the debt yield on a loan and the likelihood the loan would pay off, according to Trepp. In a review of some $30.2 billion in commercial mortgage-backed securities loans, Trepp analysts said 28% of the loans that offered yields of 8% or less were paid off, but that rose to 43% of loans with yields of between 8% and 10%, and 75% of loans with yields higher than 14%.

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