Seniors in Canada have been leveraging home equity at a rapid pace in that country, as Canadian reverse mortgage debt held by the nation’s seniors has topped $4.3 billion (roughly $3.3 billion USD) even as demand appears to have slowed slightly. This is according to filings from Canada’s Office of the Superintendent of Financial Institutions (OSFI), as reported by Canadian housing news outlet Better Dwelling.
“OSFI filings show reverse mortgage debt reached a new record high in July,” the outlet reports. “The debt is still showing double digit growth, but the rate has fallen to almost a quarter of peak.”
The rise to $4.3 billion CAD in reverse mortgage debt in July represents a rise of 0.62% from the prior month, and a 13.63% rise when compared to the same period last year.
“Yes, that’s huge growth and a new record all-time high,” writes Better Dwelling’s Daniel Wong in his reporting of the data.
However, while the rate of debt has gone up significantly, the rate of new reverse mortgage borrowing appears to have slowed.
“The 12-month rate of growth peaked at 57.46% in October 2018, and has been sliding ever since,” Wong writes. “This is still above the recent low in December 2019, but it’s generally trending lower.”
Additionally, since the onset of the COVID-19 coronavirus pandemic, reverse mortgage borrowers have added an extra $113 million CAD in reverse mortgage debt, but this figure is “about 30% lower” than the same period in 2019, Wong writes.
“Not to dismiss the substantial growth rate, but things are slowing a little,” he writes.
However, unlike the situation in the United States, reverse mortgage debt in Canada is growing at a faster pace than the country’s traditional mortgage credit.
“The double digit growth is still substantial though, coming in at nearly double the rate of traditional mortgage credit growth,” Wong writes. “However, it’s still dropped to just a fifth of the rate seen during peak growth just a few years ago.”
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.
Market leader HomeEquity Bank has garnered a lot of attention from American reverse mortgage industry participants over its creative uses of advertising, most recently employing former fraudster-turned-security consultant Frank W. Abagnale, Jr. in a campaign designed to assist seniors with avoiding scams that target them.
Read the report on Canadian reverse mortgage debt at Better Dwelling.