If you’ve ever taken the time to look at the HUD’s Principal Limit Factor tables for HECM loans it doesn’t take long to see the dramatic effect rising interest rates have in reducing the amount of proceeds for reverse mortgage borrowers. Both mortgage professionals and consumers can easily fixate and worry about rising mortgage rates and their negative impact on home values and borrowing power. However the factors influencing home appreciation are not quite that cut and dried. Let’s consider a few points.

As loan interest rates rise banks & lender’s refinance business will dwindle forcing them to loosen lending standards to compete for potential borrowers. While this mostly applies to traditional mortgage lending relaxed lending standards result in more qualified buyers increasing housing demand and prices alike.

Home price appreciation is not strictly influenced by interest rates. One would think that as interest rates rise that home appreciation rates would slow. Not necessarily. Historically there have been several instances where home values increased as interest rates…