Reverse Mortgage Rates – June 20, 2008

For the first time in my memory (15 years studying HECM rates), the FED changed a past rate that will affect most HECM’s. Loan rates in July will reflect the average for the last week of May. Last week the FED said that the 1-year CMT for the week ending May 30th was 2.16%. Today they revised it to be 2.19%.

This week, because of the floor used in finding Principal Limit Factors (PLF’s), all Treasury-based HECM’s with a margin of +158 or less will give the same maximum PLF’s as will all LIBOR-based HECM’s with margins of +90 or less. Using these margins, the initial note rate on a LIBOR HECM will be 37 bp less than that on a Treasury HECM. The spreads have reversed — LIBOR HECM should be gaining some traction!

Ibis software handles many different indices. The rates of today are:

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