Reverse Refis On The Rise In Time of Pandemic
May 12, 2020
Data from Reverse Market Insight reveals that reverse mortgage refinance transactions were responsible for 18.8% of endorsements in the first quarter of 2020. A year ago they represented 4.2% of endorsements, and 13% inthe fourth quarter of 2019, according to Reverse Mortgage Daily.
“We’ve definitely seen an increase in reverse-to-reverse refinances in the past few months,” said John Lunde, Reverse Market Insight president and co-founder.
Lunde says there are two factors driving the increase in reverse refinance transactions. As interest rate margins on reverse mortgages increased, lower index rates allowed lenders to increase their lending limits for borrowers with higher revenue levels. According to Lunde, this opened funds for paying costs at closing for borrowers and an increase in marketing initiatives to expand the reach for more refinance opportunities.
"Second, an onslaught of proprietary product enhancements introduced as market competition increased in the private market prior to the pandemic created higher [principal limit factors] and lower interest rates for many borrowers. Some of those with existing proprietary loans found an incentive to refinance them largely due to the interest rate environment," according to the report.
Lunde does caution that once things return to normal, it is possible that these rates may level off as well.
Read more about the increase in reverse mortgage refinance transactions.
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