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Reverse Mortgage News for Seniors
Reverse Mortgage Market Currently at $4.3 Trillion,
Less than 1% of Potential
New Reverse Mortgage Market Index rises to 205.6, as
a result of a Senior Home Equity Increase of $19 billion in first
quarter
 July 9, 2007 Americans age 62 or older hold an
estimated $4.3 trillion of home equity according to the NRMLA/Hollister
Reverse Mortgage Market Index (RMMI). Although the reverse mortgage
industry has seen tremendous growth in the last five years, only a
little more than 300,000 reverse mortgages have been originated in its
short history, representing less than 1% of market penetration.
The index, launched June 28, 2007 by the National
Reverse Mortgage Lenders Association (NRMLA) and The Hollister Group is
the first market indicator to collect critical market, housing and
demographic data, and to track and project the market for reverse
mortgages.
The idea of using home equity to finance
retirement is becoming increasingly main stream even among the current
generation of seniors who have traditionally been debt averse, said
Peter Bell, President of National Reverse Mortgage Lenders Association (NRMLA).
The RMMI illustrates the significant opportunity for mortgage industry
participants as the home increasingly plays a role as a retirement
asset.
In the first quarter 2007 alone, there was a $19
billion increase in senior home equity. This increase was reflected in a
0.4% increase in the RMMI to 205.6 from 204.7 in the prior quarter. The
index will reflect the current value of senior home equity on a
quarterly basis.
As the baby boomers approach retirement age, a
larger portion of aggregate US home value will be held by seniors. The
current estimated level of $5 trillion in senior home value could
potentially double to exceed $10 trillion in the next ten years said
Liz Scholz, Managing Director with the Hollister Group in Washington DC.
Observations and statistics from the inaugural
launch of the RMMI, include:
● RMMI projects as much as $37 trillion in home
value by 2030, from which home equity figures are derived, assuming
historical appreciation and taking into account the demographic shift as
boomers begin to turn 62;
● The average home equity in a senior-owned
household is estimated to be about $230,000 according to the Hollister
Group;
● While senior home equity has grown each
quarter since 2000, growth rates fluctuate dramatically in line with
general home price appreciation:
o Current $19B growth in Q1 2007 is the lowest increase of all
quarters from 2000;
o 2004 and 2005 experienced the strongest growth in home equity
-- $464 billion and $600 billion respectively;
o Q3 2004 saw the single largest spike in home equity for any
quarter since 2000, adding nearly $200 billion in home equity.
Reverse mortgages enable seniors age 62 or older to
convert a portion of their home equity into tax free cash that can be
used for any purpose, such as retirement needs, paying medical bills or
achieving other goals.
About NRMLA
National Reverse Mortgage Lenders Association (NRMLA)
represents the reverse mortgage industry, serving as an educational
resource, policy advocate and public affairs center for lenders and
related professionals. NRMLA was established in 1997 to enhance the
professionalism of the reverse mortgage business. For more information,
visit
www.nrmlaonline.org.
About Hollister Group
Hollister Group LLC is a consulting and financial
analytics firm with specialization in reverse mortgage products.
Hollister provides consulting to the reverse mortgage industry in new
market entry, new products, and best execution. The Hollister Group is
also supporting the reverse mortgage industry with unique data and
analytics.
www.hollisterllc.com.
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