Reverse Mortgage Market Sees Value of Senior
Citizens’ Homes Climb, Equity Decline
Senior home values hit $5.09 trillion in the second
quarter; equity declined to $4.28 trillion
Oct. 16, 2007 - The value of homes owned by
Americans who are old enough to qualify for a Reverse Mortgage, age 62
and over, increased slightly during the second quarter of 2007, but
senior home equity declined slightly, according to the Reverse Mortgage
Market Index.
The RMMI measures the potential growth of reverse
mortgage market opportunity for those who service that demand, primarily
lenders. It is published quarterly by the National Reverse Mortgage
Lenders Association (NRMLA), in conjunction with the Hollister Group,
The RMMI showed a slight increase in senior home
values to $5.09 trillion in the second quarter from $5.07 trillion in
the first quarter, but declined in outstanding senior home equity—$4.28
trillion from $4.29 trillion.
The 0.1% quarterly decline in senior home equity
outstanding was driven by a slightly higher increase in the estimate of
existing mortgage debt held and by Office of Federal Housing Enterprise
Oversight (OFHEO) and Federal Reserve mild downward adjustments to first
quarter data.
The RMMI declined overall to 205.1 from 205.3.
“There continues to be a substantial amount of home
equity in homes headed by consumers aged 62 and over,” said Peter Bell,
President of NRMLA.
“We fully expect the reverse mortgage products to
continue to take hold as previously untapped home equity value
intersects with the aging of the population over the next five to ten
years.”
On average, the home equity held by consumers age
62 and over is $230,000 and the aggregate amount of home value held
increased by $12 billion during the second quarter.
“Despite the decreasing consumer confidence and
mixed economic indicators observed in the late spring and early summer,
the reverse mortgage market continues to remain substantial both in size
and in opportunity”, said Susanna Kondracki, a Managing Director with
the Hollister Group.
Reverse mortgages are becoming a more mainstream
financial planning tool for older homeowners, according to the
association.
A reverse mortgage enables older homeowners (age
62+) to convert part of the equity in their homes into income without
having to sell the home, give up title, or take on a new monthly
mortgage payment.
The reverse mortgage is aptly named because the
payment stream is “reversed.” Instead of making monthly payments to a
lender, as with a regular mortgage, a lender makes either one or more
payments to the borrower. The loan is repaid when the borrower moves
out of the property.
Editor’s Notes
NRMLA Identity Statement
National Reverse Mortgage Lenders Association (NRMLA)
represents the reverse mortgage industry, serving 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. For more information,
visit www.nrmlaonline.org.
Hollister Group Identity Statement
Hollister Group LLC is a consulting and financial
analytics firm with specialization in reverse mortgage products.
Hollister provides consulting to the reverse mortgage industry in new
market entry, new products, and best execution. The Hollister Group is
also supporting the reverse mortgage industry with unique data and
analytics. www.hollisterllc.com.
