U.S. Seniors’ Home Equity is Now a $5.83 Trillion Reverse Mortgage Opportunity

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.

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“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.Screen Shot 2016-03-22 at 1.42.59 PM

“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

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  • We are talking about a lot of equity in the homes of our seniors. You take that with over 8,000 seniors a day turning age 62, that spells a lot of opportunity in the reverse mortgage space!

    Just like Jim Dean pointed out, why are we only tapping into 2% of the senior population over 62 years of age that own their own homes?

    It can be for many reasons, our message may not be getting out there the right way, are their to few of us to reach the many seniors in the market place or are we not going after the right markets. Could be a combination of all three?

    I do know this, with statistics like that are in Jason’s article, there is no reason we can’t be successful with more than 2% of the market!

    This article alone should make us stand up, take notice and realize what a great financial retirement planning tool we have in our tool Box. Going after the financial planner/advisor, attorney, accountants as well as small community banks and credit unions can reach many of these seniors. Those seniors that have a great deal of equity in their homes usually have many other assets, this usually means, they deal with the professionals like I just mentioned.

    Not only what I just got through pointing out is so very important but since the FA ruling has gone into play, we must target a more affluent and easier qualifying type of client. This is where those kind of seniors are and the home values are usually much higher.

    Please don’t take what I am saying the wrong way, we are still in the business of helping those in need. We still are people with passion, we care about our seniors and we want to do all we can for them under our new guidelines. I am just pointing out what most of us know already, and that is, we must go after this type of market in order to be successful in this day of age!

    John A. Smaldone
    http://www.hanover-financial.com

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