The rate is a daily interest rate.
The duration is a maximum duration - the person who borrows the bitcoin can repay it at any time, but must be prepared to repay the loan by the end of the duration, or the exchange will liquidate their altcoins to recover the bitcoin and automatically repay the loan. The profit you will get from each loan will be (daily interest) * (actual duration of the loan).
The effect you are observing is that of people rapidly borrowing and repaying the loans. If a borrower gets a loan at a high percent interest rate, and a short time later a lower interest offer becomes available, they have an incentive to repay the high interest loan and pick up the new loan at a lower interest. There are bots which manage this process automatically for traders, contributing to the rapid borrowing and payback cycle you have observed.