The reverse mortgage market is stronger than ever, according to a new report.
Data published by Reverse Mortgage Daily reveals that July’s statistics indicate the reverse mortgage market is holding strong. In fact, the market appears to be in better shape than ever before.
Specific highlights of the report revealed that according to data procured from Ginnie Mae and other various expert sources, the production of new Home Equity Conversion Mortgage (HECM)-backed securities (HMBS) for July was an impressive $1.42 billion. Reasons for this include the slow but sure recovery of capital markets and consistently low interest rates, both of which are spurring healthy production and an ample seasoned pool. All of these factors culminate into what has now formed the highest issuance level since February 2018.
Further revealing the market’s strength is the fact that the U.S. Department of Housing and Urban Development (HUD) reported a 4,256 HECM endorsements during the month of July. This marked an impressive increase from June’s 4,209 endorsements, yet failed to reach the apex of May’s counts.
However, experts have pointed out that May’s higher statistics could have been a direct result of a backlog of endorsements resulting from the hubbub caused by the coronavirus pandemic. Also affecting raised levels of HMBS issuance are several larger economic factors, as well as the implementation of new rules implemented by the Federal Housing Administration (FHA) in October 2017—a move which caused reduced activity in reverse mortgage business.
Another highlight pointed out is an increased interest in the reverse mortgage product category.
Michael McCully, Partner at New View Advisors, commented on this trend and how it specifically related to the market’s current health and vitality: “We have seen a steady upward trend in HMBS issuance all year, and anecdotal evidence of record or near-record applications and new originations from lenders.”
McCully further noted that the this uptick causes him to forecast a hopeful view for the industry’s performance from now throughout 2020. He reiterated that although the transition away from the LIBOR index may be a volatile factor, all other signs are overall quite positive.