It’s no secret the COVID-19 pandemic has had a devastating effect not only on the most vulnerable of the population, especially the aged and those with pre-existing health conditions, but is has also devastated the U.S. economy which is currently undergoing unemployment numbers not seen since the Great Depression of the 1930s. Yet, according to Reversemortgagedaily.com (RMD), the reverse mortgage industry is currently undergoing an “influx” of interest.
A recent industry outlook survey conducted by RMD states that while many businesses both small and large suffered significant setbacks as the once in a century pandemic took hold in March of 2020, the reverse mortgage industry actually realized one of its best years in decades. While the pandemic isn’t responsible entirely for the industry growth, the financial insecurity that resulted from it is most definitely playing a significant role.
Michael Branson, CEO of All Reverse Mortgage, attributes lower interest rates as one of the major reasons behind the reverse mortgage boom. With interest rates being one of the primary factors in determining how much cash you will receive when approved for a reverse mortgage loan, borrowers able to jump on lower rates will naturally receive more benefits and money from their loan. Lower rates mean better performance of equity retention for the life of the loan, Branson goes on to point out.
A Positive Reverse Mortgage Industry Outlook
Conducted late last year between the weeks of November 11 and December 2, the RMD outlook survey queried more than 150 reverse mortgage industry experts to share their experiences with the impact COVID-19 might have on their personal business operations come 2021. They also inquired about their overall growth strategies for 2021, while pinpointing the biggest challenges and opportunities. The overall result of the survey was that industry optimism is running high.
In terms of numbers, 75 percent of responders were said to be “somewhat optimistic or very optimistic” about 2021, despite the persistence of the COVID-19 pandemic and its more recent accompanying mutations. The general outlook for the reverse mortgage industry is said to be better than that predicted for pre-pandemic 2020.
60% of industry responders claimed that their outlook has improved during the past year, while a third said that their position has remained the same as it was prior to the pandemic. This is a positive development for potential borrowers. As if to add credence to this, RMD was able to interview a number of reverse mortgage originators who stated that business did not slow with the new year, like it did at the beginning of 2020, but instead grew. They also stressed that this growth was manageable. More good news for borrowers.
Says Tim Kennedy, Director of Business Development at the U.S. Mortgage Corporation, the phone is ringing every day with potential customers. He also stated that increasing the lending limit has helped a lot. Whereas in the past he dealt with borrowers who either didn’t qualify or get the amount of money they needed, now he’s able to call them back and recalculate their loan numbers. Part of what’s behind this is that their homes are a year or two older and housing values have gone up.
In the Final Analysis
In the final analysis, the COVID-19 pandemic is increasing reverse mortgage volume in 2021, and by all indicators, it doesn’t look like things are about to slow down anytime soon. In fact, 70 percent or more of respondents to the RMD survey say that the COVID crisis will directly lead to increased business. Only 5 percent minority predict a decrease in volume.
Brandi Braley of Neighborhood Mortgage, anticipates that business will remain brisk. While there’s always the need for reverse mortgages, lots of people are out of a job and/or a career, which means that for anyone close to retirement age who ended up losing their job, a reverse mortgage looks like a good option for getting some much needed cash. That’s how many people are looking at reverse mortgages in the time of COVID. Not as a means of paying off debts or increasing the quality of life, but as a means of replacing their lost income.
There’s no doubt that the pandemic has turned everything onto its head. It’s changed the way we do business, the way we travel, the way we interact with one another, and the way we communicate. It’s also resulted in massive unemployment or forced retirement. That’s where reverse mortgages come in. It can be used as a compliment to your retirement savings, fund in-home nursing care, and it can help you downsize to a smaller home, perhaps in a state that boasts a lower cost of living like Florida or Texas. No wonder the reverse mortgage business is booming in a time of crisis.