Senior Home Equity Falls 3% in Q1, Down 20% From Peak

Home equity for seniors ages 62 and older fell by $87.3 billion in the first quarter of 2011 to $3.21 trillion, ending up down 20% from its peak in the fourth quarter of 2006. The findings are based on the latest Reverse Mortgage Market Index, provided by RiskSpan and the National Reverse Mortgage Lenders Association.

The RiskSpan RMMI measures reverse mortgage market opportunity by determining the overall market size of seniors’ home equity. In the first quarter, the index showed a near-3% decrease to a 153.3 reading on the index scale.

The decline was driven by the renewed weakening of the housing market, according to RiskSpan, after an apparent stabilizing in 2010, housing prices in 360 of the 395 metropolitan statistical areas tracked by FHFA and RiskSpan fell in the first quarter of 2011. “Offsetting this decline in housing prices, mortgage debt levels fell for the 7th straight quarter to their lowest levels since Q2 2007,” wrote Allen Jones, RiskSpan CEO, in an email to RMD.

Chart: Reverse Mortgage Market index

Tags: Reverse Mortgage Market index

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The growth of the reverse mortgage market depends on the senior population growth, RiskSpan says, taking into account housing prices and senior debt levels. In its last report, RiskSpan noted through evaluations of U.S. census data, that the population of seniors aged 62 and over is projected to grow from its current level of 50 million to 83 million by 2030.

View the RiskSpan RMMI for Q1 2011.

Written by Elizabeth Ecker

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