August’s issuance level for Home Equity Conversion Mortgage (HECM)-backed Securities (HMBS) consisted of 80 pools totaling $859 million, according to data released by New View Advisors LLC.
Year-to-date, there has been $6.7 billion in HMBS issuance, which puts the sector within range of surpassing not only the 2019 total of $8.3 billion but also 2018’s $9.6 billion total and 2017’s $10.5 billion total.
“August production of original new loan pools was about $666 million, down slightly from July’s $691 million, but nonetheless impressive compared to $593 million in June, $586 million in May, $470 million in April, $455 million in March, $501 million in February, and a mere $390 million in August 2019,” said New View Advisors in a statement. “Last month’s tail pool issuances totaled $193 million, again below the typical $200-$250 million range.”
New View Advisors credited several factors for the increased vibrancy of the reverse mortgage sector: a recovered capital market, low interest rates, lower default rates and renewed lending by private lenders that temporarily halted operations at the start of the COVID-19 pandemic. As a result, new production of HMBS is now exceeding its long-term average range of $500 million to $600 million. However, the company added that this robust performance “may soon be challenged by economic conditions and the transition out of LIBOR.”
The question of the pandemic’s impact on senior housing wealth has yet to be determined. The most recent data released by the National Reverse Mortgage Lenders Association/RiskSpan Reverse Mortgage Market Index determined that homeowners 62 and older saw their housing wealth grow by 1.6 percent or $120 billion in the first quarter of this year to a record $7.54 trillion from the fourth quarter of 2019.
"COVID-19 has impacted millions of families and their retirement portfolios, and a new study from the Center for Retirement Research at Boston College indicates that market shocks are a growing concern for many families whose retirement assets are in 401(k)s," said NRMLA President Steve Irwin when the first quarter data was announced. "The responsible use of home equity may be an option to help mitigate certain market risks and help seniors stay financially secure during future market disruptions."