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Senior Home Equity Nears $4 Trillion Peak

The estimated aggregate value of home equity owned by seniors is just under $4 trillion, positioning it 1% below its peak level of $4 trillion in the fourth quarter of 2006, data show.

In the first quarter of 2015 the estimated aggregate value of seniors’  home equity was $3.96 trillion, according to the National Reverse Mortgage Lenders Association/RiskSpan Reverse Mortgage Market Index (RMMI). The first quarter of 2015 is the twelfth consecutive quarter in which the index has risen.

Driving the rising amount of equity in seniors’ homes is their home value and the declining amount of senior-held mortgage debt.

“The $63.5 billion increase in senior home equity in the first quarter was fueled by an estimated $61.6 billion increase in the aggregate value of senior housing and a $1.9 billion decline in senior-held mortgage debt,” NRMLA said in a statement.

RMMI, a quarterly measure which analyzes trends in the home values, home equity, and mortgage debt of homeowners 62 and older, has reached 189.67, its highest level since the first quarter of 2007, data show. The RMMI increased 1.6% from the fourth quarter of 2014 when the index stood at 186.63.

“As the economy recovers and the amount of housing wealth held by older homeowners continues to grow, home equity is an increasingly valuable resource America’s seniors can use to help fund their longevity,” said NRMLA President Peter Bell.

The current senior equity levels represent a 34% recovery since the post-Recession trough reached in the second quarter of 2011, when senior equity levels had fallen to an estimated $3 trillion, notes NRMLA.

The senior housing value estimate is based on the Federal Housing Finance Agency’s first quarter of 2015 all-transactions Indices. 

Written by Cassandra Dowell