In some areas where reverse mortgage numbers are thriving, the reasons aren’t so clear cut, says a recent report from Reverse Market Insight. The report addresses some of those areas across the country and aims to get at why some do better than would be expected when it comes to market penetration and adoption rates of HECM loans.
RMI lists the Top-10 cities by loan volume, then tests to see whether the number of senior households in those areas is correlated with the number of households. While the top 10 for volume share a similar list with the top 10 for senior households, the relationship isn’t exactly clear. The findings, based on RMI’s analysis show, for example, that Baltimore is generating more than four times as many loans per household as Chicago.
What can be concluded, RMI says, is that the markets where reverse mortgages have a high rate are places that are likely to see an even greater future increase, thus, companies looking to market may be wise to address areas where the product has done well historically. The findings show that higher penetration in the fourth quarter of 2010 was strongly correlated with adoption rates in the first quarter of 2011.
Source: Reverse Market Insight
“It makes sense given high customer satisfaction ratings that our product does better in areas where potential borrowers already know friends or family in their local area with good experiences,” the RMI report says.
States with the greatest market penetration were Washington, D.C. (8.4%), Maryland (4.4%), Utah (4.3%), California (4.1%) and Nevada (4.0%).
Written by Elizabeth Ecker