Reverse mortgage market potential is on the rise, says a study released Thursday. Senior home equity increased by $30 billion in the fourth quarter of 2011, reaching a total level of $3.22 trillion. The near-1% increase was due to increases in home values and a a decline in housing debt overall, according to Risk Span and the National Reverse Mortgage Lenders Association, which track senior home equity on a quarterly basis.
“Our nation’s demographic and economic trends suggest that the reverse mortgage market will continue to grow,” said Peter Bell, NRMLA president and CEO. “This data further validates that reverse mortgages are a fundamental tool to help fund longevity at a time when many Americans might face limited options.”
The index showed a stabilization in the fourth quarter, as total home equity rose 0.9% due to a 0.6% increase in home values and a 0.3% decline in mortgage debt, Risk Span and NRMLA report.
While aggregate senior home values are still 15% below their peak, the 0.6% uptick may be a sign that markets appear to be stabilizing, RiskSpan Chief Operating Officer Allen Jones told RMD.
The reverse mortgage market shows potential for growth based on the data, NRMLA said.
“Many seniors face the possibility of losing their homes based on a shortfall in cash each month and the reverse mortgage can be a great financial solution,” Bell said. “Home equity is a key component to financial prosperity for American seniors.”
Written by Elizabeth Ecker