3.step three Research of your own code regarding presumption damage getting premature installment
Observe that whether your private exposure (q) understands the bonus about offer will get 0. Upcoming only the impacted debtors tend to pay back very early, if for example the ex lover blog post rate of interest stays large. In the outcome of a lowering interest all of the debtors tend to pay-off very early. People to own which the bonus regarding the offer stays b commonly pay off early and take up a unique credit at a lowered interest. The rest, to possess exactly who the personal chance has actually know will additionally pay off early. To them this new get regarding the price was 0.
It reinvests the paid loan in one rate of interest while the new financing speed
In the model a risk premium exists only for the first credit and not for the second credit. If the debtor takes up the second credit at the low interest rate ( \(_<2l>)\) the interest rate cannot-by assumption-decline any more in future. The bank cannot impose a risk premium on the second credit, because the bank has no damage if the second credit is also prematurely repaid. (więcej…)