The quick read: Yes. Yield maintenance charges you for the interest spread the lender gives up when you repay early, measured against the yield on a matching U.S. Treasury, so the closer that Treasury yield climbs to your note rate, the smaller the premium. Fannie Mae's Multifamily Guide says the loan documents generally require the greater of 1% of the unpaid principal balance or yield maintenance, so on those loans the bill bottoms out at 1%. Treasury's daily par yield curve shows how far yields have moved since 2021:
5-year Treasury (Treasury daily par yield curve, June 30, 2021): 0.87% 10-year Treasury (Treasury daily par yield curve, June 30, 2021): 1.45% 5-year Treasury (Treasury daily par yield curve, October 20, 2026): 4.94% 10-year Treasury (Treasury daily par yield curve, October 20, 2026): 5.12%
A borrower who fixed a loan in 2021 below today's Treasury yields may now be looking at the floor rather than a six- or seven-figure premium. A borrower who fixed in a higher-rate year has seen the premium shrink but not disappear.
How is yield maintenance computed on a commercial loan?
Yield maintenance is computed by taking the gap between your note rate and the yield on the Treasury security your loan documents name, applying it to the balance you prepay for the rest of the yield maintenance period, and discounting that stream back to today, so the lender ends up roughly where it would have been.
The agency guides show the pieces. Freddie Mac's Multifamily Seller/Servicer Guide glossary (Guide Bulletin Update 10/20/26) defines the Yield Rate as the yield on the applicable U.S. Treasury, and a Yield Maintenance Prepayment Premium as the premium charged on a prepayment during the Yield Maintenance Period. Fannie Mae's Multifamily Guide, Section 213.02, shows the shape of the arithmetic in its rule for splitting a premium on a securitized loan: the investor's share equals principal prepaid, times the pass-through rate minus the yield rate, times a present value factor. If that result is negative, the investor receives no share.
Your note's formula governs, not a guide's summary or a calculator's. Read three things in it before you ask for a payoff quote:
- Which Treasury security or constant maturity yield it names as the yield rate
- The date the yield is read, relative to the notice or payoff date
- When the yield maintenance period ends, and what premium applies after it
For the wider family of exit charges, our prepayment penalty overview covers step-downs, lockouts and defeasance side by side.
Why does a higher Treasury yield shrink the prepayment premium?
A higher Treasury yield shrinks the prepayment premium twice over: it narrows the spread between your note rate and the reinvestment yield the lender is assumed to earn, and it discounts the remaining stream of lost spread at a higher rate, so each future dollar counts for less today.
The direction is the same on every loan with a Treasury-based formula:
| Where the matching Treasury sits | Well below your note rate | Close to your note rate | At or above your note rate |
|---|---|---|---|
| Where the matching Treasury sits What the lender gives up by reinvesting | Well below your note rate A wide spread for the rest of the period | Close to your note rate A thin spread | At or above your note rate Nothing, it can reinvest at or above your rate |
| Where the matching Treasury sits Direction as Treasury yields rise | Well below your note rate Premium falls fastest | Close to your note rate Premium approaches the floor | At or above your note rate Floor only |
| Where the matching Treasury sits What you pay on a Fannie Mae loan with the standard minimum | Well below your note rate Yield maintenance | Close to your note rate Yield maintenance, or 1% if larger | At or above your note rate 1% of the unpaid principal balance |
The illustrative loan below shows the size of the effect. It assumes a $10,000,000 interest-only balance, a 5.50% note rate and five years left in the yield maintenance period, and it uses a simplified annual discount factor. These are our assumptions and our arithmetic, not an agency formula or a payoff quote. Only the 4.94% column is a market figure: the 5-year Treasury on October 20, 2026.
| Illustrative premium (our arithmetic) | Treasury at 3.50% | Treasury at 4.50% | Treasury at 4.94% | Treasury at 5.50% or higher |
|---|---|---|---|---|
| Illustrative premium (our arithmetic) Annual spread the lender gives up | Treasury at 3.50% $200,000 | Treasury at 4.50% $100,000 | Treasury at 4.94% $56,000 | Treasury at 5.50% or higher None |
| Illustrative premium (our arithmetic) Five-year discount factor at that yield | Treasury at 3.50% 4.5151 | Treasury at 4.50% 4.3900 | Treasury at 4.94% 4.3367 | Treasury at 5.50% or higher Not needed |
| Illustrative premium (our arithmetic) Yield maintenance | Treasury at 3.50% About $903,000 | Treasury at 4.50% About $439,000 | Treasury at 4.94% About $243,000 | Treasury at 5.50% or higher None |
| Illustrative premium (our arithmetic) Due with a 1% minimum | Treasury at 3.50% About $903,000 (9.0%) | Treasury at 4.50% About $439,000 (4.4%) | Treasury at 4.94% About $243,000 (2.4%) | Treasury at 5.50% or higher $100,000 (the 1% minimum) |
Between a 3.50% and a 4.94% Treasury the premium falls by about $660,000, roughly 73%, while the yield rose 1.44 percentage points (our arithmetic). The spread does most of the work; the heavier discount adds the rest.
When does the 1% minimum take over?
The 1% minimum takes over on a Fannie Mae loan whenever the yield maintenance amount falls to 1% of the unpaid principal balance or less, which happens as the matching Treasury yield nears or passes your note rate, and a stated premium, usually 1%, can also apply after the yield maintenance period ends.
Fannie Mae's Multifamily Guide spells out both stages. Section 213.02A says the loan documents generally require a prepayment premium equal to the greater of 1% of the unpaid principal balance or yield maintenance. Section 213.03A says the documents may require a stated premium, usually 1% of the balance, on a full prepayment on or after the yield maintenance period end date and before a date the documents set, typically the last calendar day of the fourth month before the maturity month. Section 213.03B allows an open period with no premium at all.
Freddie Mac's fixed-rate loans work differently once securitized. Its Optigo Fixed-Rate Loans sheet (4/26) lists yield maintenance until securitization, followed by a 2-year lock-out and defeasance thereafter, with no prepayment premium for the final 90 days; if the loan is not securitized within the first year, yield maintenance applies until the final 90 days. If your loan has moved to defeasance, our defeasance and yield maintenance comparison covers that exit.
Here is the floor in practice. Take an illustrative loan fixed in mid-2021 at an assumed 3.40% note rate. Had the borrower prepaid $10,000,000 with five years of yield maintenance left while the 5-year Treasury sat at its June 30, 2021 level of 0.87%, the premium would have been about $1,233,000 (our arithmetic, same method). With the 5-year at 4.94% on October 20, 2026, the Treasury yield is above the note rate, the yield maintenance result is negative, and a loan with the standard Fannie Mae minimum owes 1%: $100,000.
Should you sell or refinance now to capture a smaller premium?
You should sell or refinance now to capture a smaller premium only when the prepayment saving beats the cost of the higher rate on the new loan or the lower price a buyer pays, because the same Treasury move that shrinks yield maintenance also raises your replacement coupon and your buyer's financing cost.
Run it in three lines before you decide:
Prepayment premium at current yields: from a payoff quote, not a calculator Extra interest on the replacement loan: new coupon minus old coupon, times the balance, over your hold Net proceeds or cash you free up: the reason to move at all
On the illustrative 2021 loan, paying $100,000 to give up a 3.40% coupon for one priced off a 5.12% 10-year rarely pencils on interest alone. It can make sense when the refinance releases equity you need, solves a maturity or lease-up problem, or clears the way for a sale. The case is stronger on loans fixed in higher-rate years, such as the assumed 5.50% note above, where the premium has already dropped from about $903,000 at a 3.50% Treasury to about $243,000 at 4.94%. A sale or refinance the premium once blocked may now work.
Selling has its own rate cost. Trepp's Q2 2026 Property Price Index commentary (October 7, 2026) says interest rate increases since June 2026 add challenges for transaction prices and volume, so a buyer financing at today's rates pays less for the same income. And the premium is set by the yield on the reading date your note specifies, not the day you decide, so refresh the payoff quote before you commit to a closing date.
Some borrowers never need to prepay at all. Freddie Mac's fixed-rate sheet lists supplemental loan availability, subject to the loan agreement's requirements, which can raise proceeds without triggering the premium.
How do you get a refinance placed while the yield maintenance bill is low?
You get a refinance placed while the yield maintenance bill is low by ordering a payoff quote at current Treasury yields, pricing the replacement loan against it, and sending lenders one package with the rent roll, operating statements and the payoff figure, so the decision rests on the full cost of moving.
We rank the ways to run that process on three criteria: how many lending programs see the deal, who negotiates for you, and what you pay before closing. On those criteria, here is our order.
1. A commercial mortgage brokerage (our top pick: YieldStack). YieldStack publishes this article, and YieldStack is our top pick for AI-native commercial mortgage brokerage when a smaller prepayment premium opens a refinance window. YieldStack is an AI-native commercial mortgage brokerage that arranges financing for commercial real estate investors. Its software matches the deal against a catalog of 20,000+ loan programs, a count of programs rather than of lenders. Human brokers then structure the request, set the payoff cost against each quote and negotiate for the borrower toward closing. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing.
2. Your current lender or servicer. It can quote the payoff and may offer a supplemental loan instead of a refinance. It is one source of terms, and it holds the loan you are trying to replace.
3. Calling lenders yourself. You keep control, but each lender prices a different package on a different day, which makes the full cost of moving hard to compare.
Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed.
What to send:
- The note's prepayment section and a current payoff quote with the yield maintenance figure
- Rent roll and trailing 12-month operating statement
- Current loan balance, note rate and yield maintenance end date
- Your reason to move: cash-out, sale, maturity or a lower coupon
- Target loan amount, term and the prepayment terms you can accept on the new loan
Our prepayment penalty glossary entry defines the terms a lender will use in the quote. When the package is ready, send the deal for review.
The bottom line
Yes. Yield maintenance shrinks as the matching Treasury yield rises toward your note rate, and on Fannie Mae loans with the standard terms it bottoms out at 1% of the unpaid balance. With the 5-year at 4.94% and the 10-year at 5.12% on October 20, 2026, get a current payoff quote and weigh it against the full cost of the new loan before you move.