Seniors enjoyed record rises in home equity this summer, holding an all-time high of $11.58 trillion in housing wealth in the second quarter, according to a new analysis.
Homeowners 62 and older saw their equity grow 4.10%, or $456 billion from the prior quarter, according to the National Reverse Mortgage Lenders Association/RiskSpan Reverse Mortgage Market Index. The gains over the period ending June 30 came before home price growth began to show signs of slowing and rising mortgage rates moved more prospective borrowers to the sidelines.
Older homeowners saw their property values jump 3.82%, or $506 billion in the second quarter, according to the Index, while their mortgage debt grew by $50 billion, a 2.36% increase. The gains mirror record equity levels of borrowers overall, which was reached earlier this year, according to Black Knight research. The nation's borrowers saw home wealth fall 5% in June and July however, and equity is on pace for a sizable reduction in the third quarter, the firm said last month.
Home value gains boosted HECM volumes in fiscal year 2022 from last October to September, according to the Department of Housing and Urban Development, but endorsements fell to a two-and-a-half year low in September, according to Reverse Market Insight. Each of the top 10 HECM lenders saw endorsements fall from August to September, and total endorsements fell to their lowest level since April 2020.
Reverse mortgage lenders are also facing increased competition from independent mortgage banks offering more home equity line of credit products. Despite the overall decline in mortgage volumes, borrowers still want cash: 97% of refinance transactions in July were cash-out transactions, according to Black Knight.
