The Reverse Mortgage Boom

reverse mortgage market in Canada

It’s long been said that “home is where the heart is” and over countless generations, that adage has remained true. While individuals have become more mobile and life has become more fast-paced, homes have not lost their place at the emotional core of family life. If anything, they have become more important than ever in turbulent times.

Homes have also taken on an important place in our financial lives as well: For most families, soaring real estate values mean their homes are their single largest asset. Not only that, but more and more, an asset that was once regarded as a passive investment, is being transformed into an active one.

What does that mean?

It means that families are increasingly unlocking some of the equity they’ve built in their homes and leveraging it to upgrade the property, help the next generation buy their homes, reduce debt, travel.

That’s why the reverse mortgage industry is flourishing in markets around the world.

At HomeEquity Bank, Canada’s sole provider of the CHIP Reverse Mortgage™ for over 30 years, we’re seeing our growth repeated across the US and the UK.  We experienced record-breaking growth in 2017 and over the past four years, we have been recognized as one of Canada’s fastest-growing companies.

In 2017 alone, our business grew 32.5 per cent year over year and we achieved $608MM in reverse mortgage originations. We are bolstering partnerships with mortgage brokers and, more than ever, homeowners (age 55 and up) are reaching out as a direct result of our marketing channels.

But it’s not all about us.

Both the UK and US markets have also experienced similar patterns of record-breaking demand. According to the UK’s industry body, The Equity Release Council, the sector recorded lending of £3 billion (~$5.3B CAD) for 2017 – a 15 year high. The fourth quarter alone saw over 10,000 new clients for the first time in a single quarter and in total, 67,000 UK citizens benefited from the product in 2017.

In the US, there are 16 active Home Equity Conversion Mortgage-backed securities (HMBS) issuers in the industry, which, taken together in 2017, generated an issuance volume totaling US $10.5B. According to the National Reverse Mortgage Lenders Association, substantial growth during the industry’s fourth quarter has also contributed to the American’s seven-year high.

This record breaking growth points to an important trend: more than ever, homeowners around the world are shifting their mindset and viewing their property as an active asset that they can monetize to help plan and fund their retirement.

This reverse mortgage boom, particularly in Canada, clearly signals that Canadians planning for retirement are embracing a long-established financial product that has never been more relevant.

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