The 10-year Treasury rate plummeted to 2.72% today. Maybe next week all Treasury HECM’s with a margin of 2.84% or less will be paying the maximum benefits. We’re in territory where the Principal Limit is maxed out and the SFSA is the only factor moving with rates. Lower rates mean less money since lower rates give higher SFSA’s. This week a Treasury HECM+225 gives $255 more than a HECM+175 (all from a lower SFSA).

This week, all Treasury-based HECM’s with a margin of +246 or less will pay the HECM maximum benefits. Ditto for LIBOR-based HECM’s with margins of +228 or less. Here’s how benefits will change this week for the average HECM borrower.  The rates as of 12/2/08 are:

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