Margins on adjustable-rate reverse mortgage loans averaged 1.96% in November, according to Baseline Reverse’s latest Margin Report.

This is down slightly from previous months, as October had an average of 1.98%, September totaled 1.97% and August leveled off at 1.99%. (Click chart below to enlarge.)

Baseline marginBut the variation is only slight, indicating a stable margin rate that suggests lenders have found their competitive footing after program changes issued in October 2017 sparked a jump in margins as players looked to regain profitability.

But while margins appear to have changed little month over month, the HECM index, which measures bond pricing for a basket of 2017 PLF Annual LIBOR loans, reflected a more notable change, rising from October’s 1066.91 to 1072.27 at the end of November.

Baseline President Dan Ribler said this is good news for investors.

“The index improved through November as the forward rate curve flattened as rates fell,” Ribler said. “A flatter rate curve is generally good for HECM ARM pricing, as higher initial rates (driven by the front of the curve/current LIBOR rates) can be offered at the same expected rate (driven by the back end of the curve/10-year swap rate).”

(Click chart below to enlarge.)

hecm index



Most Popular Articles

Here are the mortgage lenders that borrowers like the most

J.D. Power’s 2019 U.S. Primary Mortgage Origination Satisfaction Study, released Thursday morning, showed that there are some lenders that customers seem to love working with more than others. Here are the ones that borrowers are partial to.

Nov 14, 2019 By

Latest Articles

Congressional vote on “de facto QM Patch” postponed

The House Financial Services Committee postponed a vote on H.R. 2445 on Wednesday, a bill that would fix the so-called QM Patch that’s set to expire in early 2021.

Nov 15, 2019 By