A recent Wall Street Journal article indicates that the number of government-backed reverse mortgages has increased 20% from the same period last year.
This stands in contrast to the number of new home equity loans which decreased 70% from the same period last year.
The increased interest in reverse mortgages is directly related to the fall-out from the financial crisis. Seniors who have suffered as a result of decreasing asset values in the capital markets see home equity as a potentially attractive source of retirement income.
The reverse mortgage market has also received a boost from the changes Congress made earlier this year that increase maximum allowable home values to $625,000 from $417,000.
The difficulty seniors are having with home sales in the current environment has also increased demand for reverse mortgages since in many cases it is the only liquidity option available to people who are in need of supplemental income.
Source: Wall Street Journal (subscription required)
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