Homeowners aged 62 and older experienced a 2.6 percent boost or increase of $152.0 billion in senior home equity for the third quarter of 2016, according a recent report from the National Reverse Mortgage Lenders Association (NRMLA). This brought the total senior home equity to $6.1 trillion.
The report adds that this rise was largely in part of a 2.3 percent increase in senior home values. NRMLA says that in turn this rose the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI) up to 217.34, putting it at yet another all-time high since the quarterly index was first published in 2000.
“The upward trajectory of the RMMI tells us that housing wealth continues to provide senior homeowners with a financial resource they can use to support their needs during their retirement years when income is dependent on Social Security, investment assets, and pensions,” said NRMLA President and CEO Peter Bell. “The positive trend is also reassuring for homeowners nearing retirement age who are less likely than their predecessors to leave the workplace with a defined benefit plan and also more likely to have long-term debt.”
The report adds that only 29 percent of households nearing retirement, or homeowners ranging in age from 50 to 64 will leave the workforce with a traditional pension, according to a recent report from Harvard’s Joint Center for Housing Studies (HJCHS). This is compared to 49 percent of today’s 65-and-older households, says NRMLA.
“The combination of constraints raises serious concerns about the financial stability of future retirees and their ability to manage the costs of aging including long-term care,” says NRMLA. “Among their policy recommendations for addressing the projected challenges, the authors of the JCHS report note that housing wealth can provide a valuable safety net for older households in need of additional financial resources.”