Abstract
This report analyzes the marketplace for reverse mortgages, including demographic changes, economic factors, innovations and the impact of securitization, and consumer expectations concerning the housing market.
Reverse mortgages are a type of home equity loan allowing older borrowers (over 62) to convert a portion of the equity in their homes into cash while retaining homeownership. The non-taxable reverse mortgage funds, plus any accrued interest, are due when the borrower dies, sells or no longer uses the home as a primary residence.
This report looks at the key factors impacting the real estate and reverse mortgage lending marketplace, and summarizes both the positive and negative factors involved, as well as the segments of the market that should experience growth.
Key points in this report include:
- Consumers' familiarity and receptivity to reverse mortgages
- The overall financial situation of consumers nearing retirement
- Factors affecting the market for reverse mortgages, including the mortgage market overall
- The dynamic competitive marketplace for these types of loans
Within this report Mintel also presents the most salient findings of consumer research in the reverse mortgages market. Of particular interest is the market potential of reverse mortgages in terms of key selling points such as the ability to pay off existing mortgage, credit card or HELOC debt. Therefore, a key focus of this report is how much and what type of debt consumers have accumulated.
Table of Contents
- Scope and Themes
- What you need to know
- Scope of this report
- Abbreviations and terms
- Abbreviations
- Terms
- Executive Summary
- Industry snapshot
- Overview of the marketplace
- Securitization expected to have a positive impact
- Who is the typical HECM borrower?
- Mintel' s consumer survey sheds light on the population aged 62+
- What' s ahead
- Fast Forward Trends
- Trend: Home as Pension
- Should I Stay Or...
- Role of the Home: Memories in the Midst of Anxiety
- Trend: Trust in Me
- Trust and Reverse Mortgages
- Mechanisms of Trust
- Market Drivers
- The current environment
- FHA-backed reverse mortgages
- Demographic factors
- Population and housing growth
- An aging population
- Figure 1: Age composition of the U.S. population, 1990-2020
- Figure 2: Homeownership rates, by age of householder, 1990-2006
- An aging population spurns retirement for work
- Figure 3: U.S. civilian labor force, age 55 and older, 1986-2016
- Recession and interest rates
- Figure 4: Household financial obligations as a percent of disposable personal income (DPI), 2003-08
- Home prices decline after years of record-breaking appreciation
- Figure 5: OFHEO house price index history, Q1 1990-Q3 2007
- Figure 6: Four-quarter appreciation by census division, 3Q 2006-3Q 2007
- Figure 7: Four quarter appreciation by state, 3Q 2006-3Q 2007
- Figure 8: Bottom 20 statistical areas and divisions with lowest rates of house appreciation, percent change, period ending September 30, 2007
- Innovations in securitization
- Figure 9: Amount of foreign holding of agency and government-sponsored enterprise (gse) backed securities, 1995-2006
- Regulatory environment
- Market Size and Trends
- Market size
- The emerging boom in reverse mortgages
- Figure 10: HECM Applications, fiscal 2005 through projected fiscal (September 30) 2008
- Figure 11: Active insured HECM loans, average unpaid balance, 1990-2008
- Figure 12: Average expected interest rates of HECMs, 1990-2007
- Figure 13: Average property value for HECMs, 1990-2008
- Figure 14: Average maximum claim for HECMs, 1990-2008
- Figure 15: Average principal limit of HECMs, 1990-2008
- Total mortgage originations
- Total home sales
- Figure 16: New and existing home sales, by type, 2001-07
- Market Segmentation
- Demographic market segmentation -- by gender
- Figure 17: Gender of HECM borrowers, fiscal year end September 31, 1990-2008
- Demographic market segmentation -- by age
- Figure 18: Average HECM borrower age, fiscal year end September 31, 1990-2008
- Geographic market segmentation
- Figure 19: Active HECM endorsements, by state and year, fiscal 2005-08
- Figure 20: Active HECM endorsements by state, and % of U.S. market share, fiscal 2007
- Figure 21: Active HECM endorsements, by state, and % of U.S. market share, total for fiscal 1990-2008
- Competitive Landscape
- Top lenders
- Figure 22: Ranking and market share of top ten HECM lenders by number of loans, year end 2007
- Figure 23: Top ten HECM lenders, Nov 2007 versus Dec 2007
- Figure 24: Top 25 HECM Lenders, market share, year end 2007
- Home mortgage market consolidation
- Key reverse mortgage lenders: profiles
- Wells Fargo Home Mortgage, Inc.
- Financial Freedom Senior Funding
- Vertical Lend Inc. (World Alliance Financial)
- Countrywide Bank
- Bank of America (formerly Reverse Mortgage of America/Seattle Mortgage Company)
- Liberty Reverse Mortgage, Inc.
- Everbank Reverse Mortgage LLC (includes former BNY Mortgage Company)
- The agencies (GSEs)
- Ginnie Mae
- Fannie Mae
- Freddie Mac
- Advertising and Promotion
- Television
- Print ads
- Figure 25: BoA print ad for "senior equity reverse mortgage ", 2007
- Figure 26: American guarantee and trust reverse mortgage seminar print ad, 2007
- Figure 27: Countrywide reverse mortgage print ad, 2007
- Figure 28: Wells Fargo reverse mortgage print ad, 2007Figure 29: Financial freedom print ad, 2007
- Direct mail
- Figure 30: Wells Fargo reverse mortgage direct mail ad, 2007
- Figure 31: Wells Fargo reverse mortgage direct mail ad for "free" seminar, 2007
- Figure 32: Financial Freedom reverse mortgage direct mail ad
- The Consumer
- Introduction
- Who owns their home?
- Figure 33: Homeownership, by gender and age, November 2007
- Figure 34: Homeownership, by income, November 2007
- Figure 35: Homeownership, by marital status, November 2007
- Figure 36: Homeownership, by number in household, November 2007
- Figure 37: Homeownership, by level of educational attainment, November 2007
- Who has mortgage debt and how large is this debt?
- Figure 38: Amount of mortgage debt, by gender, November 2007
- Figure 39: Amount of mortgage debt, by age, November 2007
- Figure 40: Amount of mortgage debt, by income, November 2007
- Figure 41: Amount of mortgage debt, by marital status, November 2007
- Figure 42: Amount of mortgage debt, by number in household, November 2007
- Who has credit card debt and how large is this debt?
- Figure 43: Amount of credit card debt, by gender, November 2007
- Figure 44: Amount of credit card debt, by age, November 2007
- Figure 45: Amount of credit card debt, by income, November 2007
- Who has educational loans and how large is this debt?
- Figure 46: Amount of educational loan, by age, November 2007
- Figure 47: Amount of educational loan, by income, November 2007
- Who has HELOCs and how large is this debt?
- Figure 48: Amount of HELOC debt, by age, November 2007
- Figure 49: Amount of HELOC debt, by income, November 2007
- Consumer intentions to bequeath homes to heirs
- Figure 50: Intend to leave home to heir, by income, November 2007
- Who has reverse mortgages?
- Figure 51: Reverse mortgage ownership, by income, November 2007
- Figure 52: Familiarity with reverse mortgage product, by gender, November 2007
- Figure 53: Would consider obtaining a reverse mortgage in the future, November 2007
- Figure 54: Would consider obtaining a reverse mortgage in the future, November 2007
- Figure 55: Would consider obtaining a reverse mortgage in the future, November 2007
- Figure 56: Would consider obtaining a reverse mortgage in the future, November 2007
- Consumer intentions to move in order to pay off mortgage debt
- Figure 57: Plan to move in order to pay off mortgage debt, November 2007
- Future and Forecast
- Future trends
- Homeownership rates will continue to rise
- Figure 58: Homeownership rates, projected increase in numbers of homeowners, by race/ethnicity, 2000 and 2010
- Homeownership by age
- Figure 59: Households, by age of householder: 2001 to 2006 (U.S. census estimates) and 2007 to 2017 (Mintel forecast)
- As Baby Boomers retire
- The continuing reverse mortgage boom
- Technology
- Market forecast
- Appendix: Trade Associations
