Reverse Mortgage Rates – January 21, 2009

The average 10-year Treasury rate fell by 18 bp last week, but today, Wednesday the 21st, the 10-year Treasury  jumped up to 2.53%. We’re still in territory where the Principal Limit is maxed out, and the SFSA and tenure conversion factors are the only things moving with rates. Higher rates and margins mean more money since higher rates give higher SFSA’s.

This week, all Treasury-based HECM’s with a margin of +326 or less will pay the HECM maximum Principal Limit. Ditto for LIBOR-based HECM’s with margins of +314 or less.

But today’s jump in rates indicates that these max margins will fall materially next week. In the table below, WSJ figures are from yesterday and H15 figures are from today. This follows our interpretation of HUD ML 2007-13.

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