Housing wealth for homeowners 62 and older grew to $6.6 trillion in Q4 2017, an increase of $149 billion in senior home equity over Q3, reports the National Reverse Mortgage Lenders Association today in its quarterly release of the NRMLA/RiskSpan Reverse Mortgage Market Index.
The RMMI rose to 238.11 in Q4, another all-time high since the index was first published in 2000. Driven by an estimated 2.0%, or $163 billion, increase in home values, gains in senior housing wealth were offset by a 0.9%, or $13.4 billion increase, in senior-held mortgage debt. On an annual basis, the RMMI increased by 8.3% in 2017, compared to an annual increase of 8.0% in 2016 and 8.5% in 2015.
“Today’s retirees are more likely to leave the workforce with a mortgage and other debts that can put stress on monthly cash flow,” said NRMLA President and CEO Peter Bell. “In these situations, financial products that convert home equity to cash could be used to pay off revolving debt from credit cards and reduce or defer monthly mortgage payments. It’s worth doing the math to find out if a mortgage refinance, home equity line of credit, or reverse mortgage loan can help increase financial security during retirement.”
Research from the Ohio State University shows that reverse mortgage borrowers often use loan proceeds to pay off an existing mortgage, and nearly a third use funds to pay down other debt, such as credit card balances or personal loans.
