Their uptake has dwindled since 2009 – but reverse mortgages could be on track for a comeback next year, according to a top broker
It’s no secret that the popularity of reverse mortgages has been on the wane in the past 15 years, slipping from a high of more than 119,000 borrowers in 2009 to just under 20,000 in the first half of this year. But their reemergence could be a trend to watch in the years ahead, according to a leading broker who’s keeping an eye on the space.
Corrina Carter (pictured), president and founder at CMS Mortgage, told Mortgage Professional America she’s expecting homeowners over 62 – the minimum age at which a reverse mortgage can be taken out in the US – to view reverse mortgages as an increasingly viable option between now and 2027, with some of the negative connotations around the product beginning to fade.
“That is a demographic that’s not going to be moving or downsizing, so I feel like that’s going to be a huge factor,” she said. “We talk every day about how much equity everybody has. So if prices are going up, equity is going up. Now you [can] tap into what you have.”
Educating borrowers on the option – and whether it’s the right choice or an unsuitable one – should be top of mind for brokers dealing in reverse mortgages, according to Carter.
That involves a conversation around the borrower deciding how they’re going to take the equity they’ve accumulated and strategically use it over the next few years.
“It was very popular in ’07, ’08, and ’09,” Carter said. “I feel like during the next three years, someone really focusing on reverse mortgages is going to knock it out of the park in our business.”
Monitoring that market and liaising with CPAs and attorneys on the educational approach, she said, will be key priorities for her team in the years ahead.
What’s more, the product should be part of a comprehensive and well-planned financial strategy rather than a crisis management tool, an important consideration outlined by the National Council on Aging.
Last year, a study commissioned by Finance of America Reverse (FAR) showed a slight uptick in the number of Americans who were considering tapping into a home equity loan.
In 2022, the first year that survey was conducted, the likelihood of an eligible homeowner using such a product was 28%, ticking slightly upward to 32% in 2023.
While that marked a small jump, FAR chief marketing officer Chris Moschner told MPA at the time that the direction of movement was positive. “It’s trending in the right direction and becoming more ubiquitous,” he said. “The educational component is incredibly important. We spend a lot of money and a lot of time to move the needle.”
“I think that, unfortunately, the direction of mortgage rates has changed since Trump got elected because his policies on tariffs, immigration and tax cuts are inflationary,” says Melissa Cohn of William Raveis Mortgage.https://t.co/sg6E8vBmPi#economicoutlook #mortgagetrends
— Mortgage Professional America Magazine (@MPAMagazineUS) November 20, 2024
How should brokers be gearing up for a busier market in 2025?
Early signs are promising that the US mortgage market could be set for a resurgence in the coming year, with expectations of lower interest rates down the line and existing-home sales booming last month.
Mortgage rates have ticked upward in recent weeks – but despite hitting a four-month high, they’re significantly below the level seen at the same time last year, when the 30-year fixed-rate average hovered well above the 7% mark.
National Association of Realtors (NAR) chief economist Lawrence Yun, meanwhile, believes the US may have seen the tail end of the protracted downturn in home sales – and increasing inventory in the new year, he said, could lead to more transactions taking place.
Top of mind for brokers as they look to the year ahead, according to Carter, should be a task that’s not as simple as it sounds: making sure their schedule is organized and optimized to get as much out of their day as possible. “I ask people all the time: ‘Show me your calendar. Show me what you’ve got,’” she said. “‘Are you busier in your mind than you are in your calendar?’
“If you really take a couple of weeks and structure yourself, I feel like originators are going to knock it out of the park.”
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