The National Reverse Mortgage Lenders Association reports that retirement-aged homeowners saw a combined 2.8 percent increase of $170.7 billion in home equity in the fourth quarter of 2016, boosting their total housing wealth to $6.2 trillion.
A 2.4 percent increase in home values for owners 62 and older in Q4 2016 drove the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI) to 221.75, an all-time high since the index was first published in 2000. On a year-over-year basis, the RMMI index rose by 9.0 percent in 2016, compared to an increase of 8.6 percent in 2015 and 8.0 percent in 2014.
“The strong RMMI in the fourth quarter of last year shows that home equity continues to be a valuable asset for homeowners 62 and older,” said NRMLA President and CEO Peter Bell. “It’s time for consumers to study what it means to have home equity and to learn about its strategic uses, including how it can be used to support retirement goals.”
Research released from the National Council on Aging and a new Issue in Brief from the Center for Retirement Research at Boston College show that home equity has gone largely underutilized by older homeowners who have been unwilling to consider housing wealth as a resource for retirement funding. NCOA and CRR both show that limited awareness and knowledge of home equity tools contribute to the low take-up of financial products, such as reverse mortgages.
To help explain home equity and its uses, NRMLA recently released its “Learn About Home Equity” infographic, and the three-part article, “An Introduction to Housing Wealth: What is home equity and how can it be used?,” which are available on NRMLA’s consumer education website www.reversemortgage.org/HomeEquity.