Senior home equity is on the rise, increasing $49.5 billion in the first quarter of 2013, according to the latest National Reverse Mortgage Lenders Association (NRMLA)/RiskSpan Reverse Mortgage Market Index (RMMI).
The quarterly increase in senior home equity was driven by an estimated $45.1 billion increase in the aggregate value of senior housing and a $4.4 billion decline in mortgage debt held by seniors, notes NRMLA.
“Today’s report continues a positive trend for the American housing market and for senior homeowners,” said NRMLA President Peter Bell.
Rising home equity and returning home values could signal that seniors will have more financial resources available to them during retirement, and that a reverse mortgage could help cushion retirement security for many senior homeowners.
“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,” added Bell.
The first quarter of 2013 marks the fourth consecutive quarter the RMMI has posted a gain, rising 1.5% from last quarter’s reading to a level of 155—the index’s highest level since first quarter 2009.
While the index has risen four months in a row, the estimated $3.25 trillion aggregate value of home equity owned by seniors eligible for reverse mortgages is still 19% below its peak level of $4 trillion in the fourth quarter 2006.
Analyzing trends in the home values, home equity and mortgage debt of homeowners age 62 and older, the RMMI is updated on a quarterly basis and tracks data beginning at the start of 2000.
Since the RMMI’s starting point, the collective home equity of Americans 62-years and older has grown by 55%.
Written by Jason Oliva