Generation Lowers Fixed Rate Reverse Mortgage Below 5%

NewImage.jpgGeneration Mortgage announced a new 4.99% fixed rate reverse mortgage product it’s offering to both wholesale and retail customers.

“We want to give senior homeowners as many alternatives as possible to enable them to stay in their house,” said Scott Peters, President and CEO, Generation Mortgage. “And with such a fragile state of our nation’s economy, home equity remains a top financial asset for seniors and Baby Boomers.”

The company has been busy, recently rolling out the first jumbo reverse mortgage in years.

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“Because we’re a lender focused exclusively on reverse mortgages, Generation Mortgage can quickly respond to the needs of the senior market and introduce new products that allow borrowers to tap into more of their home equity,” said Peters.

The announcement from Generation comes only days after MetLife quietly rolled out its fixed rate at 4.99%.  Both companies are matching Live Well Financial, who released a fixed rate at 4.99% in April.

Data from Reverse Market Insight shows Generation is the 5th largest reverse mortgage lender in the country.

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  • This type of continued lowering of note rates is very helpful in dealing with senior objections when it comes to comparing the cost of a HECM to other mortgages. However, the increased spread between proprietary rates and HECMs just makes proprietaries look that much more expensive.

  • I'm not sure if this is good or bad. I know that it is confusing to borrowers. If they are in process and they hear that rates drop, they get more fearful. What about the many who are better off with an adjustable loan, but get confused by the low fixed rate? The industry needs higher limits, not lower rates. Have you ever heard a borrower say that they would take a loan if the rate was just three eights lower?

    • Michael,

      The answer to your last question is absolutely yes.

      You make great points about the confusion issue.

      For many seniors the best option would be the annually adjusting rate HECM. We are having a hard time locating that product.

      • Wow, I finally got a one word answer from you. I have personally never had a client bring up the rate as their primary issue (not that it never comes up, it does.) The loan amount has always meant more to the majority of my clients. My point was that a “rate war” seems at first to be good for the industry now, but what happens when rates start to rise or when clients get confused by moving rates? I guess only time will tell. Let's hope all of the recent changes are for the better.

  • The MetLife 4.99% fixed rate has been out for awhile. What is not being said is that it doesn't offer the $0 monthly service fee, which I assume it doesn't just as MetLife's doesn't. Options are a great thing to offer our clients, but where we've been offering a choice between the two with MetLife, homeowners are still choosing the 5.56% with no service fee and little to no origination fee. With the competitive pricing, we've also with the product been able to give signifcant reductions in the MIP. Most educated homeowners will realize that it would take many years with a slightly lower rate to make up the upfront savings of the other products on the market.

  • This is an interesting dynamic. At 4.99 with service fees included and origination fee not being lowered, it will take quite a long time to realize the savings that the lower rate will provide. In many instances, the lower upfront costs, even with the higher rate, works out to a bigger advantage for the client…I have seen ammortization comparisons that take 7 yrs or more to make up the cost difference. The better sales people will focus on true benefit to borrower and not just rate…it's the same as selling LIBOR or Fixed. Just because it's fixed, doesn't always mean there is more benefit to the borrower, not everyone needs full draw. This is not a rate sale, it's a product suitability sale. Which loan makes sense for the specific client is what matters most.

    • Paul well said. It is unfortunate the powers that be have managed to turn it into a rate sale. I can't wait for the witch hunt in a few years for all those bad LO's that convinced seniors to take a full draw so they could make more money.

      • oldtimer2,

        Don't gloat or delight too much. That witchhunt could have terrible consequences for us all — even the “good LOs,” like you.

        I can wait. In fact I hope it never occurs. My fear is — it might come before very long.

  • oldtimer2,rnrnDon’t gloat or delight too much. That witchhunt could have terrible consequences for us all — even the “good LOs,” like you. rnrnI can wait. In fact I hope it never occurs. My fear is — it might come before very long.

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