America’s seniors continue to amass equity in their homes, and it could be a way for older Boomers and other seniors to deal with losses they took during the recession, one lender trade group says.
The National Reverse Mortgage Lenders Association/RiskSpan Reverse Mortgage Market Index, surveyed quarterly, reached an all-time high of 195.29 in the second quarter of 2015.
The previous high was 192.03 set in the fourth quarter of 2006.
On a quarter-over-quarter basis, the index rose 3% in the second quarter, as senior home equity increased by $117.1 billion.
“The strong gains in housing wealth among America’s seniors are an encouraging economic indicator for the millions of boomers who weathered the recession on the cusp of their retirement years,” said NRMLA President Peter Bell. “The home equity they’ve worked so hard to build up can serve as a valuable financial management tool for years to come.”
More equity means more opportunity for seniors looking at taking out a reverse mortgage. Earlier this year, the FHA released new guidance that make reverse mortgages safer for surviving, non-borrowing spouses. The rules allow FHA-approved lenders to delay foreclosure proceedings against non-borrowing spouses in the event of the death of the last surviving borrower. The rule was embraced by housing advocates and mortgage lenders alike.
Key findings of the survey include:
The increase in senior home equity relative to the first quarter was driven by an estimated $122.8 billion increase in the aggregate value of senior housing, which was offset by a $5.7 billion increase in senior-held mortgage debt.
The second quarter of 2015 was the thirteenth consecutive quarter in which the index has risen, and the current estimate of $4.08 trillion for the aggregate value of senior home equity represents a 38% recovery from the post-Recession trough in Q2 2011, when senior equity levels had fallen to an estimated $3 trillion.