Senior Home Equity Reaches $3.9 Trillion, Breaks Previous Records

Home equity among seniors continues to rise, reaching $3.9 trillion in the fourth quarter of 2014 — signaling potential for more reverse mortgage market opportunities to come as economic factors improve.

The NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI), which measures trends in home values, home equity and mortgage debt of homeowners age 62 and older, reached 186.78 during the fourth quarter of 2014, marking the 11th straight quarter of growth for the index, which dates back to 2000.

Previously, the RMMI rose to 183.87 in the third quarter of 2014 — the highest level since Q3 2007. Also in the third quarter of 2014, senior home equity increased to $3.84 trillion, but has since risen further to $3.9 trillion in the fourth quarter of 2014.
RMMI Chart 2014 Q4

“The [RMMI] rose in Q4 2014 by 1.5% to 186.78, its highest level since Q2 2007,” Allen H. Jones, managing director of RiskSpan, tells RMD. “The $59.1 billion increase in senior home equity in the fourth quarter was fueled by an estimated $61.3 billion increase in the aggregate value of senior housing, offset by a $2.2 billion increase in senior-held mortgage debt.”

Aggregate home values in the fourth quarter increased to $4.98 trillion, from $4.92 trillion in Q3 2014, and $4.62 trillion in Q4 2013.

These increased values, coupled with the rise in home equity possessed by senior homeowners, mark a positive trend for the reverse mortgage space that could continue into the future, as more Americans enter the 62-plus demographic.

“The amount of home equity possessed by reverse mortgage-eligible homeowners will grow because of the sheer number of homeowners entering that age cohort,” says Peter Bell, the president and CEO of the National Reverse Mortgage Lenders Association. “When you see the average equity grow as well, then that enhances the opportunity.”

Written by Emily Study

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