The reverse mortgage market will fall in the short term, but over the next five years is positioned for growth starting in 2014, pending greater acceptance of reverse mortgage products and a comeback in home values.
This is the finding of a recent industry report by global research firm IBISWorld, which has added the reverse mortgage market to its list of ongoing industry research initiatives.
IBISWorld estimates industry revenue declined at a rate of 6.2% annually from 2007 to 2012 due to widespread home price declines and the impact on senior homeowner equity.
“The subprime mortgage crisis and subsequent recession decimated home values and with them the equity of homeowning seniors,” said IBISWorld industry analyst Doug Kelly.
Over the next five years, however, IBISWorld forecasts industry revenue will grow.
“A recovering housing market and improvements in senior finances in line with the overall economy are expected to return the industry to growth from 2014 onward. An aging population and increasing acceptance of reverse mortgages as a viable retirement planning option will also underpin growth,” IBISWorld writes. “However, the majority of this growth will come in the latter half of the outlook period as the industry deals with new regulations and continued high default rates, low housing prices and weak demand.”
With former market leaders having since left the business, the number of providers is expected to remain relatively flat, according to the research, with business being disbursed among a wide range of providers.
The report is available for purchase here.
Written by Elizabeth Ecker