Click To Open: The Hidden Cost Of Fixed Rate Debt.pdf

Pensford-Resource-Hidden-Cost-of-Fixed-2020.pdf
Preview of Click to Open: The Hidden Cost of Fixed Rate Debt
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📊 Size: 5.07 MB
📄 Pages: 6 pages
⬇️ Downloads: 35

Summary

A borrower's average loan term was 90.5 months, but they prepaid 43 months prior to maturity, resulting in additional costs, including $27mm in prepayment penalties and $18.3mm in term premium overpayment. Had they matched the fixed rate term with the hold period, they could have saved $23.8mm in interest expense. Considering floating rate options on loans held for four years or less could have saved an additional $8.8mm. The borrower's average interest rate was increased by 1.09% due to prepayment penalties and 0.69% due to term premium.

Description

A borrower's average loan term was 90.5 months, but they prepaid 43 months prior to maturity, resulting in additional costs, including $27mm in prepayment...

Technical Information

  • File Format: PDF
  • File Size: 5.07 MB
  • Pages: 6
  • Language: EN
  • Total Downloads: 35
  • Last Updated: 1 week ago

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