Senior-Held Home Equity Surges to $12.7 Trillion in Q2 2023, Rebounding from Previous Decline

In a positive turnaround, senior-held home equity witnessed an impressive resurgence in the second quarter of 2023, surging by $820 billion to reach a total of $12.7 trillion. This notable increase comes as revealed by the Reverse Mortgage Market Index (RMMI), the latest release from the National Reverse Mortgage Lenders Association (NRMLA), in collaboration with data analytics firm RiskSpan.

The RMMI, which had experienced a decline in the two preceding quarters, rebounded to an index score of 444.16 in Q2, up from 406.52 in the prior quarter. This resurgence brings it closer to its historical peak in Q2 2022, when senior-held equity collectively soared to nearly $15 trillion. It’s important to note that the mortgage debt for this demographic also surged, reaching $2.3 trillion, serving as a counterbalance to the overall figure.

RiskSpan highlights a parallel trend when examining the S&P’s National Home Price Index. This metric, too, reached an all-time high in mid-2022 before experiencing a downturn until January of this year. In recent months, the index has been on the path to recovery.

Despite ongoing economic challenges and the predictions of some economists regarding a possible recession, Steve Irwin, President of NRMLA, emphasizes the significance of the rebound in senior-held equity levels.

“Inflation remains a concern, and some economists are still forecasting a potential mini-recession in 2024, so the resurgence in home equity levels is indeed welcome news,” Irwin stated. “The strategic utilization of home equity can play a crucial role in mitigating the impact of these economically challenging times, and it’s something that every homeowner should consider when crafting or updating their retirement plan.”

The RMMI has shown remarkable growth from 2011 to 2021. After experiencing a decline in 2011, the collective figure stood at approximately $3 trillion. By Q3 2021, the RMMI index had surged by 4%, surpassing the $10 trillion mark for the first time. The index continued its upward trajectory with a 3.98% increase in Q4 2021 and a 4.91% rise in Q1 2022, breaching the $11 trillion milestone. In Q2 2022, the RMMI expanded by 4.10% to reach $11.5 trillion.

The collective wealth of senior housing crossed the $9 trillion threshold for the first time in July 2021, followed by a $8 trillion milestone in April 2021. Notably, it had previously exceeded $7 trillion in March 2019.