Canadian seniors have been tapping home equity through the use of a reverse mortgage at record levels, and now the nation’s collective reverse mortgage debt has topped $4 billion for the very first time. This is according to the Canadian Office of the Superintendent of Financial Institutions (OSFI), reported by Better Dwelling.
“OSFI filings show reverse mortgage debt hit a new all-time high in December ,” writes Better Dwelling’s contributing editor Daniel Wong. “The high is the first time reverse mortgages reached a balance of over $4 billion.”
The increase to $4.01 billion CAD (roughly $2.87 billion USD) represents an increase of 0.69% on the figure reported in November 2019, and a year-over-year increase of 13% from the same time in 2018, OSFI reports. However, reverse mortgage growth throughout Canada appears to be slowing, the report says.
“The rate of growth for reverse mortgage debt is falling very quickly from highs,” Wong writes. “The 13% 12-month increase for December, is the lowest in at least 7 years of filings – and likely goes back further. For a little context, residential mortgage credit is growing at 5.1% in January. Reverse mortgage credit is slower than usual, but not all that slow.”
Still, even though growth appears to be slowing, it is still very high, says Wong.
“As this number increases, growth is expected to taper even further,” he says. “Possibly a bit of a problem, considering this was not an insignificant amount of consumer spending.”
In January, it was reported that the two lenders that offer reverse mortgages in Canada – HomeEquity Bank and Equitable Bank, respectively – both experienced record increases in 2019. HomeEquity Bank originated a record $820 million CAD (approximately $627.9 million USD) in reverse mortgages in 2019, up from $767 million in 2018 and $309 million five years prior.
Equitable Bank, meanwhile, managed to grow its own portfolio to roughly $20 million CAD, an increase of 540% in the last year alone. Equitable Bank is a relatively recent entry in the Canadian reverse mortgage space, but its CEO Andrew Moor recently described the Canadian reverse mortgage market as “underdeveloped” in an interview with Canadian publication the Financial Post.
HomeEquity Bank recently detailed to RMD its efforts to create more resonant advertising targeted at the senior demographic, enlisting a neuroscience research firm to aid the company’s marketers in tailoring its messaging to the ways seniors find most appealing.
CEO Steve Ranson and CMO Yvonne Ziomecki also presented some examples of the advertising which benefited from the firm’s work at the National Reverse Mortgage Lenders Association (NRMLA) Annual Meeting in Nashville, Tenn. in November, garnering significant attention from event attendees.
Read the report on Canadian reverse mortgage debt at Better Dwelling.