A report published by Reverse Mortgage Daily found Home Equity Conversion Mortgage (HECM) endorsements rose in May, reaching 5,038 loans, and marking the best single-month total in more than two years.
These numbers represent data released by the Department of Housing and Urban Development (HUD) and compiled by Reverse Market Insight and New View Advisors.
This rise also is a 214.7% increase when compared to April’s numbers, which recorded just 1,601 loans.
“Last month we weren’t depressed by incredibly low April HECM endorsement numbers, and this month we look at the figures as catching up rather than some new trend,” RMI said on the report.
Reverse Mortgage Daily’s report took a closer look at the endorsement drop in April’s data, with some sources speculating that part of the decline could be attributed to the lack of representation that reverse mortgages have in the HECM data.
“[That] doesn’t seem likely,” said Michael McCully, partner at New View Advisors. “If anything, private production had a bigger albeit temporary disruption than HECM, as two of four private lenders dropped out of the market in March-May. While some private product certainly eats into HECM volume, there is not a lot of overlap between HECM and private product borrowers.”
As HECM endorsements rose so have mortgage applications, according to the Mortgage Bankers Association (MBA). Applications rose 2.7% from the prior week for the week ending on May 22, 2020.
"Despite mortgage rates hovering near MBA's all-time survey low, refinance activity was essentially flat but still 176% higher than last year. Conventional refinance applications increased 2%, while government refinancing was down almost 7%," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting.
The refinance share of mortgage activity decreased to 62.6% of total applications from 64.3% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3.4 percent of total applications.