It’s somewhat reasonable. If you make a loan, and it’s paid early, you stop making the expected profit and there is no guarantee you can reinvest the funds at t

It’s somewhat reasonable. If you make a loan, and it’s paid early, you stop making the expected profit and there is no guarantee you can reinvest the funds at the same rate. Therefore you will either disallow prepayment, charge for it, or price the risk of prepayment into your interest rate. If you can’t do any of those … you will invest elsewhere until the rates go up, for there is lots of competition for capital. But borrowers should know what they’re getting into, and have options.