#TermMax @TermMax
I thought fixed rate meant just one thing: you agree to a percentage— and that’s it, no going back.
Turns out there’s an interesting detail in TermMax.
Suppose I took out a loan with a fixed interest rate.
After a while, the market rate changes.
What happens?
According to TermMax documentation, the borrower can, before maturity, buy the corresponding FT on the market and use them to repay the debt.
And here an unusual asymmetry arises:
if the current market rate is higher than mine—FT may be available cheaper, and early repayment can potentially become more beneficial.
If the rate is lower than mine—I can simply keep the original fixed rate.
TS Finance documentation
So, fixed rate here isn’t just:
“I locked in the borrowing cost forever.”
Rather:
“I locked in the maximum borrowing cost, but gained the ability to optimize repayment.”
And that’s already a completely different way of thinking about fixed-rate lending.
I’m curious how many people actually pay attention to this opportunity.
I thought fixed rate meant just one thing: you agree to a percentage— and that’s it, no going back.
Turns out there’s an interesting detail in TermMax.
Suppose I took out a loan with a fixed interest rate.
After a while, the market rate changes.
What happens?
According to TermMax documentation, the borrower can, before maturity, buy the corresponding FT on the market and use them to repay the debt.
And here an unusual asymmetry arises:
if the current market rate is higher than mine—FT may be available cheaper, and early repayment can potentially become more beneficial.
If the rate is lower than mine—I can simply keep the original fixed rate.
TS Finance documentation
So, fixed rate here isn’t just:
“I locked in the borrowing cost forever.”
Rather:
“I locked in the maximum borrowing cost, but gained the ability to optimize repayment.”
And that’s already a completely different way of thinking about fixed-rate lending.
I’m curious how many people actually pay attention to this opportunity.