A growing demand among Canadian seniors to unlock the value of their home equity has resulted in a record sales year for the country’s leading provider of reverse mortgages.
Toronto, Ontario-based HomEquity Bank, which provides the Canadian Home Income Plan (CHIP) Reverse Mortgage, reported $459 million in reverse mortgage sales for 2016, a 26% increase over the previous year, the bank announced Wednesday.
These 2016 results reflect a significant increase in HomEquity Bank’s mortgage broker business, which has grown 48% year-over-year following the introduction of the bank’s Mortgage Broker Direct service in September 2015. This service offers continued education credits and an official designation for approved brokers.
Also an indicator of growth in 2016, the bank notes that requests for product information increased by 83% as a result of direct client outreach through TV advertisements and online engagement.
A federally-regulated Schedule 1 Canadian bank, HomEquity Bank is the only national provider of the CHIP Reverse Mortgage solution. The company attributed its 2016 sales performance to its efforts to expand consumer direct business and bolster its relationships with referral partners, large chartered banks.
“At a time of remarkable appreciation in real estate values, we are privileged to help Canadian seniors access that equity,” said HomEquity Bank President and CEO Steve Ranson in a press release. “We look forward to continuing our track record of year over year growth for 2017.”
Under the CHIP product, eligible homeowners can choose between several payment options, including a lump-sum payment, a loan to set up planned advances that provide regular disbursements, or a combination of the two.
Unlike the HECM product in the U.S., which requires applicants to be at least 62 years of age, Canada’s CHIP Reverse Mortgage is available for homeowners age 55 or older. There is also no government guarantee on the CHIP Reverse Mortgage product.
Similar to the HECM program fee structure, the CHIP reverse mortgage also mandates a home appraisal, independent legal advice, as well as closing and administrative costs, and an application fee, according to a paper published in 2016 by the Massachusetts Institute of Technology’s Center on Finance and Policy.
Written by Jason Oliva