It might not be until roughly 2014, according to estimates from industry executives who spoke before attendees of the National Reverse Mortgage Lenders Association eastern regional conference in New York City this week.
“In the long term, the industry is poised to grow,” said Steve McClellan, president and CEO of Urban Financial Group speaking on a conference panel. “There are 1.5 million new seniors every year. Echo Boomers by themselves are expected to absorb 75% of all real estate inventory by 2020, which will cause real estate to start appreciating.”
McClellan, when asked for his estimate of when the industry will see 100,000 loans on an annual basis estimated that it will not be next year, but 2014 or 2015.
Other executives agreed that the industry is not likely to return to its 100,000 peak level until home values return to a higher level. Those values, according to a recent Zillow survey of real estate economists, may not show an uptick until 2013.
“It’s probably not 2013,” said Pete Engelken, president and CEO of Genworth Financial Home Equity Access, of the reverse mortgage industry’s return to 100,000 annual units. “It could be 2014. It’s going to be a function of a lot of things, home values being a catalyst.”
The market potential driven by financial planners is another source executives are looking to for future growth. Some say financial planners are beginning to come around to reverse mortgage products, with two recent studies analyzing the use of a reverse mortgage to supplement retirement income, and finding that overall, retirees are better off when tapping into their home’s wealth through a home equity conversion product.
“It’s slow going, but we are seeing more and more planning professionals looking at this product seriously,” Engelken said. “I talk to as many financial planners as I possibly can. Five years ago, [one planner told me] half joking, if he’s doing his job right, no clients will ever need a reverse mortgage. I reminded him of that comment recently and he said he has 10 clients right now that absolutely need to start using home equity. It’s not a question of if they’re going to run out of money, it’s a question of when.”
When the market does begin to grow, new products are one source that could drive that upward movement, executives said.
“With the Saver and Purchase, we’re starting to see different consumer segments emerging,” Engelken said.
“There are a lot of new markets we still need to tap,” said Michelle Zachensky, vice president of reverse mortgage fulfillment, MetLife. “The HECM Purchase could be 70,000 units annually by itself.”
Written by Elizabeth Ecker
