Homeowners aged 62 and older saw their collective housing wealth increase in Q1 2020 by 1.6% compared to the previous quarter. This constitutes an increase of approximately $120 billion to a record of $7.54 trillion, according to data provided by the National Reverse Mortgage Lenders Association (NRMLA) in conjunction with data analytics firm RiskSpan.
The increase was reported Friday in the quarterly release of the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI).
The RMMI rose in Q1 2020 to 271.58, which marks another consecutive all-time high since the index’s original publication in 2000. That increase was described as being primarily driven by an estimated 1.4% (or $132 billion) increase in the values of homes owned by seniors. This was offset, however, by a 0.7% (or $12.3 billion) increase of senior-held mortgage debt.
Current events related to the COVID-19 coronavirus pandemic may be a powerful communicator in terms of the potential benefits of employing home equity, according to NRMLA President Steve Irwin.
“COVID-19 has impacted millions of families and their retirement portfolios, and a new study from the Center for Retirement Research at Boston College indicates that market shocks are a growing concern for many families whose retirement assets are in 401Ks,” says Irwin in a press release announcing the new record. “The responsible use of home equity may be an option to help mitigate certain market risks and help seniors stay financially secure during future market disruptions.”
Senior housing wealth topped $7 trillion for the first time ever according to a previous RMMI data release in March 2019, before hitting a new threshold of $7.17 trillion the following October, $7.19 trillion in December and $7.23 trillion this past April.
The RMMI also previously recorded a year-over-year increase of 6.5% in 2018, lower than the 8.4% increase recorded in 2017 and the 8.2% increase in 2016.