7 reverse mortgage stats every new lender must know

With interest rates on the rise and loan volumes down year-over-year, traditional home lenders are taking a hard look at adding reverse mortgages as a way to replace lost business.

Traditional mortgage lenders' quarterly loan volumes are 19% lower than a year ago, and depending on the extent to which they rely on refinancing, they could be facing even steeper production declines. Refinance volumes are 34% lower than they were in the fourth quarter of 2016, according to Attom Data Solutions.

In addition, profit margins in traditional mortgage lending are lower than they were 12 months ago, according to the Mortgage Bankers Association. The average mortgage lender generated a net gain of $237 per loan in the fourth quarter of last year, down from $535 per loan in 4Q 2016.

All this makes adding a new product line increasingly attractive as a business development tool.

But there is a lot that lenders considering originating reverse mortgages for the first time should make sure they know about the product before they take the plunge.

The Home Equity Conversion Mortgages that the Federal Housing Administration makes available to borrowers 62 and older have pros and cons that have to be carefully weighed.

From purchase mortgage potential to challenges for loan officer productivity, reverse mortgages offer traditional lenders a mix of risks and rewards that the following seven statistics illustrate.

This HECM market data comes from Stratmor Group's presentation at a recent conference by technology provider ReverseVision, and several other private and public information sources.

Reverse mortgage lending is concentrated, but not to the same extent the traditional mortgage market is, according to Home Mortgage Disclosure Act and Reverse Mortgage Insight data compiled by Stratmor. The top 10 lenders in traditional home lending control more than 83% of the market.