For 4Q12, the NRMLA/RiskSpan Reverse Mortgage Market Index is at 152.59, up from 150.21 in 3Q12 and 147.01 in 4Q11. The index fell between 4Q11 and 1Q12, but has increased in the three succeeding quarters.
“The positive trends supported by today’s RMMI are good news for senior homeowners, and they contain positive signs for the American economy and housing market,” said Peter Bell, president of the National Reverse Mortgage Lenders Association.
Since reverse mortgages are underwritten based on the equity in the property, the increase in the index means seniors could qualify for more proceeds.
Over the last 12 months, the total home equity of homeowners 62 and older increased by $117 billion, up 3.8% to $3.15 trillion; the last time it was close to this level was in the fourth quarter of 2010. Meanwhile their home values increased by $97 billion to $4.23 trillion (up 2.3%) and their mortgage debt declined by $20 billion (down 1.8%).
RMMI peaked at 191.22 in 4Q06, when the collective home equity owned by Americans 62 and older hit $4.0 trillion. Since that high water mark, their home values have declined 13.6%, and their collective home equity has declined by 20.2%.
“In the second half of last year, the RMMI had its strongest two quarters of growth since early 2006,” said Allen Jones, managing director of RiskSpan. “Senior home equity increased by $50 billion between the third and fourth quarters of 2012, driven largely by the increase in the aggregate value of seniors’ homes.”