Pennsylvania is experiencing a significant increase in reverse mortgage activity, says a recent Reverse Market Insight report, which cites the state’s fifth-largest senior population, yet third-lowest penetration rate as likely reasons for the trend.
The January/February 2011 report ranked Pennsylvania as No. 5 on the list of Top-10 states with reverse mortgage endorsements, showing a 27.2% growth rate since the previous year’s report.
John Lunde, president of Reverse Market Insight, said he thinks the increase is due to the reverse mortgage industry’s attempts to “catch up” in Pennsylvania’s market.
“It’s the lowest of the top five [states] in terms of penetration rate, and what percentage of those households already have a reverse mortgage,” said Lunde. “It has lagged behind in terms of how many of those seniors have taken out reverse mortgages in the past.”
According to Lunde, as of December 2010, the state of Pennsylvania had the third-lowest percentage of senior-owned households with reverse mortgages, at 1.5%. Only Ohio and North Carolina had lower percentages, at 0.92% and 1.06%, respectively.
North Carolina also showed an increase in reverse mortgages, with a 40% growth in endorsement rate at the time of the report. This, Lunde said, is due to changed state regulations making it easier to get a reverse mortgage.
“If we stack it up against the other top five states, [North Carolina and Pennsylvania] have done pretty well. California and Florida are declining in volume, Texas is holding steady along with New York,” said Lunde. “With Pennsylvania, it’s really a matter of folks in the industry looking for growth, and this was an obvious place to turn.”
According to 2009 U.S. Census projections, Pennsylvania will remain one of the top five states with the highest senior citizen populations. By 2015, an estimated 16.9% of the state’s residents will be 65 or older.
Lunde believes Pennsylvania will continue to experience a rise in reverse mortgages. “I think there’s still room to grow,” he said. “It may not grow 27% when we see the full year, but it’s very likely to do better than the other four in the top five.”
Written by Alyssa Gerace