We will likely never see a week like this again. 10-year rates plummeted. In the colored tables below you can see the changes in benefits for the average HECM borrower (a 73-year old in a $250,000 home). A Treasury HECM+200 will give $5,811 more tomorrow. A HECM+175 will give $197 less because the benefits were at the cap last week, and the new lower rates increase the service fee set-aside.
This week, all Treasury-based HECM’s with a margin of +218 or less will pay the HECM maximum benefits. Ditto for LIBOR-based HECM’s with margins of +190 or less. Using these margins, the initial note rate on a LIBOR HECM would be 15 bp more than that on a Treasury HECM. The rates as of 11/25/08 are:
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