If you were to ask me one year ago which choice for senior borrowers was the better one, between the fixed rate and the adjustable, I would have told you the adjustable with few exceptions.

That opinion is changing as the investors in Reverse mortgage backed securities continue to clamor for more and more profit out of these loans.

The margin that banks and their investors needed was at approximately 1% at this time last year. Go ahead and liken the "margin" to "profit margin". It is the profit in the loan.

To give an example the borrower may have gone with an adjustable rate mortgage with an index of one percent. If the margin was an additional one percent the actual loan rate would have been 2%.

Well, margins have been quickly changing. They went to 1.5% by the spring of last year, and changed to 1.75 about 3 months ago.

Well, it's on the move again. It appears Fannie Mae is telling us preemptively that the expected margin next week will raise up about one half point next week.

There are many reasons why the ARM is such an attractive reverse mortgage option. In fact I wrote an article dedicated to it, but these changes are cutting into the weight of my arguments.

For example, when a senior borrower closes on the reverse mortgage, he has the option of taking as much or little of his allotment as he chooses. What if he takes a lot?

If the lender is willing to lend $100,000, if the borrower needed all of it immediately the fixed may be a better choice. The reason is, with the new margin increase, the average 15 year interest rate for the adjustable is now higher than current fixed rate.

Although the adjustable is still extremely low right now one can expect it to go up in the coming years. We can't expect these low rates to continue.

One other benefit to the ARM over the fixed was that lenders were giving substantially more money on the ARM. This number is not nearly so profound today.

The ARM formerly gave a prospective borrower a bunch more cash than the fixed. Not so much now. And who knows, with the new margins, perhaps the fixed will offer more.

The fixed rate was the ugly sister in reverse mortgages. This is changing.