Seniors are sitting on huge piles of home equity, according to a report from the National Reverse Mortgage Lenders Association (NRMLA). The NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI) found that in Q2 2018, the total housing wealth of homeowners aged 62 and older in the U.S. grew to $6.9 trillion, a $130 billion in senior home equity over Q1 2018.
NRMLA President and CEO Peter Bell notes that for most homeowners, the home represents the largest chunk of personal wealth.
"If you consider that the typical retiree household might have one or two incomes from Social Security, a modest pension and/or limited income from low-yielding fixed-income instruments, and, perhaps, a diminished 401(k) account, then home equity becomes their greatest asset and an important resource for funding their future," said Bell.
The NRMLA RMMI hit its highest mark since 2000 in Q2, at 249.37, and the NRMLA notes that the increase is mainly driven by an estimated 1.7 percent or $143 billion increase in senior home values, offset by a 0.8 percent or $12.8 billion increase of senior-held mortgage debt.
Seniors weren’t the only group to see rises in equity in Q2, however. According to the CoreLogic Homeowner Equity Insights for Q2 2018, equity for all homeowners with mortgages has increased by 12.3 percent, or by $981 billion since Q2 2017.
“Homeowner property values continued to increase in value this quarter with homeowners gaining an average of $16,200 in home equity wealth,” said Frank Nothaft, Chief Economist for CoreLogic. “When aggregated across all homeowners, that totals almost $1 trillion in gains in home equity wealth. This wealth gain will support additional consumption spending and home improvement expenditures in coming years.”
Additionally, the total number of mortgaged residential properties with negative equity, borrowers who owe more on their mortgages than their homes are worth, went down by 20.1 percent, from 2.8 million homes in Q2 2017 to 2.2 million in Q2 2018. The national aggregate value of negative equity was approximately $279.8 billion in Q2 2018.