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Reverse Mortgage News for Seniors

Senior Citizens in U.S. See Home Equity Climb for Fourth Straight Quarter

Seniors’ mortgage debt at lowest point since 2007: Reverse Mortgage Market Index

June 13, 2013 – Americans 62 and older – that is the age group eligible for reverse mortgages -  now have more equity in their homes than at any time in the last four years, according to data released today by the National Reverse Mortgage Lenders Association.

The new information comes from the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI), which analyzes trends in the home values, home equity, and mortgage debt of homeowners 62 and older.  The RMMI is updated quarterly and tracks back to the start of 2000.

 “Today’s report continues a positive trend for the American housing market and for senior homeowners.  With home values recovering and equity increasing, seniors will have more financial resources available to them during retirement,” said Peter Bell, president of the National Reverse Mortgage Lenders Association. 

“With proper planning, using a reverse mortgage to access that equity is one option to help fund living expenses, home maintenance costs, or health care needs.”

In the first quarter of 2013, the RMMI reached its highest level (154.95) since the first quarter of 2009.  After falling to start 2012, the RMMI increased slightly in the second quarter before showing significant growth in the third and fourth quarters. That trend continues in the most recent data.

The aggregate home equity held by Americans 62 and older grew 6.4 percent over the past year to a total of $3.25 trillion – a four-year high.  

The $49.5 billion increase in senior home equity from the last quarter of 2012 to the first quarter of 2013 was driven by an estimated $45.1 billion increase in the aggregate value of housing owned by Americans 62 and older while their collective mortgage debt declined by $4.4 billion.

The mortgage debt for Americans 62 and older stands at $1.07 trillion – its lowest level since the third quarter of 2007.  Senior mortgage debt peaked at $1.14 trillion in the third quarter of 2010.

Reverse Mortgage Market Index

Quarter

Home Value
Among 62+
($ Trillions)

Home Equity Among 62+
($ Trillions)

Mortgage Debt Among 62+
($ Trillions)

RMMI

RMMI Quarterly Change

2010-Q4

4.24

3.12

1.12

148.76

0.18%

2011-Q1

4.15

3.03

1.11

144.72

-2.71%

2011-Q2

4.09

2.99

1.11

142.47

-1.56%

2011-Q3

4.14

3.03

1.10

144.75

1.60%

2011-Q4

4.17

3.07

1.10

146.52

1.22%

2012-Q1

4.14

3.05

1.09

145.67

-0.58%

2012-Q2

4.15

3.06

1.09

146.13

0.31%

2012-Q3

4.22

3.14

1.08

149.87

2.56%

2012-Q4

4.28

3.20

1.08

152.59

1.81%

2013-Q1

4.32

3.25

1.07

154.95

1.55%

Prepared by RiskSpan, Inc.
Data sources: American Community Survey, Census, FHFA, Federal Reserve

The housing value estimate used in the RMMI is based on the Federal Housing Finance Agency’s Q1 2013 all-transactions Indices, which saw housing values increase in 53 percent of the 395 MSAs covered by RiskSpan.

 

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Going back to the start of 2000, the RMMI peaked at 191.21 in the fourth quarter of 2006, when the home equity held by Americans 62 and older reached its highest level of $4.0 trillion.  Since that high water mark, home values have declined 12.7 percent for homeowners 62 and older, and their collective home equity has declined by 19.0 percent. 

Over the long term, however, home equity has proven to be a valuable resource.  The collective home equity of Americans 62 and older has grown by 55 percent since the RMMI’s starting point.  In Q1 of 2000, seniors owned $2.10 trillion in home equity, compared to $3.25 trillion today.

Overall, the home equity held by American homeowners of all ages stood at $6.94 trillion in the latest data, its highest level since the second quarter of 2008.  Since the RMMI’s starting point, Americans’ total home equity has grown by 29 percent.  

About Reverse Mortgages by the National Reverse Mortgage Lenders Association

Reverse mortgages are available to homeowners 62 years old and older with significant home equity. They are designed to enable retirees to borrow against the equity in their homes without having to make monthly payments as is required with a traditional "forward" mortgage or home equity loan.  Under a reverse mortgage, funds are advanced to the borrower and interest accrues, but the outstanding balance is not due until the last borrower leaves the home, sells, or passes away. Borrowers may draw down funds as a lump sum at loan origination, establish a line of credit or request fixed monthly payments for as long as they continue to live in the home. 

To date, more than 750,000 senior households have utilized an FHA-insured reverse mortgage.  More than 575,000 senior households are currently using a reverse mortgage to help meet their financial needs.  For more information, please visit www.ReverseMortgage.org

About the National Reverse Mortgage Lenders Association

The National Reverse Mortgage Lenders Association (NRMLA) is a membership organization comprised of more than 300 companies and more than 1,000 people participating in the reverse mortgage industry.  With a membership responsible for more than 90 percent of reverse mortgage transactions in the United States, NRMLA serves as the national voice for the industry.  It serves as an educational resource, policy advocate and public affairs center for lenders and related professionals. NRMLA was established in 1997 to enhance the professionalism of the reverse mortgage business.  All NRMLA member companies commit themselves to our Code of Ethics & Professional Responsibility.

 

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