Reverse mortgage volume drops in August

The reverse mortgage volume boom appears to have diminished for now, at least if new data is any indication.

Home Equity Conversion Mortgage (HECM) endorsements fell in August, 2021 by 14.3% to 3,679 loans, with July now having marked the end of a streak of monthly volume above a threshold of at least 4,000 units that has been observed since late 2020. This is according to data compiled by Reverse Market Insight (RMI).

However, the production of new HECM-backed securities (HMBS) recorded just under $1.1 billion in HMBS issuance in the sixth month of the period after the London Interbank Offered Rate (LIBOR) “era.” All told, 2020 saw $10.6 billion in total HMBS issuance, eclipsing a recent industry high of $10.5 billion of issuance in 2017 according to publicly available Ginnie Mae data and private sources compiled by New View Advisors.

The industry’s general bolstering on the volume side by refinance volume remains a concern for the growth of the reverse mortgage business sector according to analysts who spoke with RMD, with one describing the share of refinance volume in August as reaching over 50% of HECM endorsements for the first time.

A sharp drop in reverse mortgage volume

Considering where reverse mortgage volume has been since November of 2020, seeing a drop of this size rather abruptly is enough to cause a degree of concern for the analysts at RMI, according to the commentary accompanying its latest data release.

“The drop is a bit concerning given the industry had been above 4,000 loans for 8 consecutive months, but it remains to be seen if this will be a momentary endorsement blip,” RMI said in the commentary.

That thought was also shared with RMD by RMI President John Lunde, who described that while the industry should pay attention to the dat

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