The amount of home equity held by American seniors continues to increase at a massive clip, now amassing $5.83 trillion as of the fourth quarter of last year, according to recent data from the National Reverse Mortgage Lenders Association (NRMLA).
An estimated $140.2 billion increase in the aggregate value of homes owned by U.S. seniors drove their share of home equity at the end of 2015, and also fueled the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI) to a new all-time high of 203.2 during the fourth quarter, up from an index reading of 198.53 in the third quarter.
On a year-over-year basis, the RMMI grew 8.1% in 2015, compared to an increase of 7.8% in 2014, and 17.5% in 2013.
“Significant gains in senior home equity are adding stability to the traditionally three-legged retirement funding stool of savings, Social Security, and pensions,” said NRMLA President and CEO Peter Bell in a prepared statement.
“For retirees leaving the workplace with a defined benefit plan, home equity is a fourth leg of the stool, available to tap when needed,” Bell added. “For the millions of seniors without a pension, home equity is a valuable resource and can be an integral part of their retirement funding strategy.”
As of the fourth quarter of 2015, the aggregate value of seniors’ home equity now represents a 16% increase from the pre-Recession peak, when senior equity levels hit an estimated $5.04 trillion during the fourth quarter of 2006.
NRMLA also noted that the previous RMMI reading of 200.19 for third quarter of 2015, which was reported late last year, was revised to 198.53, primarily due to the updated total housing value from the Federal Reserve’s Z.1 release of historical data on March 10, 2016.
The Association plans to issue its next RMMI report for the first quarter of 2016 later this year, on June 21.
Written by Jason Oliva