Homeowners aged 62 and older saw their collective housing wealth increase in Q4 2020 by 3% compared to the previous quarter. This constitutes an increase of approximately $234 billion to a record of $8.05 trillion, according to data provided by the National Reverse Mortgage Lenders Association (NRMLA) in conjunction with data analytics firm RiskSpan.
The increase was reported late last week in the quarterly release of the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI), circulated to NRMLA members in an association email.
The RMMI rose in Q4 2020 to 289.44, 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 2.7% (or $261 billion) increase in the values of homes owned by seniors. This was offset, however, by a 1.5% (or $27 billion) increase of senior-held mortgage debt.
Year-over-year, the RMMI figure increased by 8.3% in 2020, outpacing previous years of change including 2019 (5.4%) and 2018 (6.3%), which is believed to be due to higher levels of home price appreciation seen in 2020. NRMLA President Steve Irwin emphasized that the increased value of homes owned by seniors could make a reverse mortgage option worth new consideration.
“Reverse mortgages provide a strategic retirement option for older homeowners of all income levels,” Irwin said in a statement announcing the new figures. “Reverse mortgages allow people to pay for in-home care and other services that allow them to age in place or provide an alternative to selling retirement assets after a market downturn. While a reverse mortgage isn’t for everyone, it can provide the financial security that many people are looking for in retirement.”
Senior housing wealth topped $7 trillion for the first time ever according to a previous RMMI data release in March 2019. It then continued to increase, reaching $7.23 trillion in April 2020, $7.54 trillion in June, $7.70 trillion in October and $7.82 trillion in January, 2021.
While 2020’s year-over-year increase is an improvement, it did not quite manage to match the 8.4% increase recorded in 2017, but did slightly best the 8.2% increase in 2016.