The number of reverse mortgages in the fourth quarter of 2017 showed a significant increase according to new statistics from industry analysts Reverse Market Insight. The surge is likely a side-effect of borrowers scrambling to obtain a reverse mortgage prior to a change in the government-regulated program that took effect on October 2, 2017. The shakeup to the powerful financial tool included changes to principle limits and mortgage insurance premiums.
Home Equity Conversion Mortgage (HECM) originators generated 4,781 loans during the month of November.
"HECM endorsements grew 6.3 percent in November, the first sign of additional case numbers issued under pre-October 2 rules showing up in endorsement volumes," RMI said in a statement.
It remains to be seen how the rule-change will affect long term demand for HECMs which allow those over 62 to tap their home equity and eliminate monthly mortgage payment. In addition, senior borrowers may also benefit from supplemental income in the form of a lump sum, line of credit or monthly payment.
Meanwhile, conventional conforming no-point 30-year fixed mortgage rates are averaging 4.125 percent while 15-year rates are near 3.5 percent.
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