January 2023 may have seen a record number of new reverse mortgage applications in Canada, announces Mich Sneddon, CPA, CA, owner and creator of specialist website Reverse Mortgage Pros. This development likely follows recent hikes in the overnight lending rate by Canada’s central bank. The current rate increase is concomitant with the monetary authority’s quantitative tightening to combat inflation.
“In our own business, there wasn’t just an increased level of interest but a record level of applicants in January – as well as a significant uptick in the numbers of folks requesting more information,” said Sneddon, a licensed Mortgage Agent with Dominion Lending Centres Edge Financial, who provides an open-access reverse mortgage guide on the Reverse Mortgage Pros website.
Official numbers for funding and application levels of reverse mortgages across all lenders are yet to be reported anywhere. However, Sneddon believes that January had the fiscal conditions necessary for a record month, with inflation and the cost of living also on the rise, making it harder for retirees to pay their bills, despite owning homes with significant amounts of money stored in them.
Although reverse mortgage rates have also increased, the gap between the rate for a Home Equity Line of Credit (HELOC) and a reverse mortgage is the smallest it has been in a long time, making reverse mortgages more attractive to Canadians.
Sneddon and his team at Reverse Mortgage Pros believe that competition in the reverse mortgage space is heating, with three major lenders now operating across multiple provinces in Canada – Bloom Finance, Equitable Bank, and HomeEquity Bank (with their flagship product – the CHIP reverse mortgage). This increased competition benefits consumers and is healthy for the reverse mortgage market because it broadens consumer options, makes the product more viable, and keeps costs down.
Reverse mortgages tend to be more complex to understand than traditional mortgages, and Seddon has released a new mortgage guide as one of the online resources to help consumers educate themselves on this product.
“Even though the housing market has cooled recently, it’s still up significantly over the past 5 to 10 years. Couple this with the increased cost of living, and there are many more people who are ‘house rich, cash poor’ but want to keep living in their home – which is another reason you’d see increases in applications in the reverse mortgage space,” Sneddon added.
About Reverse Mortgage Pros
Reverse Mortgage Pros is a knowledge resource founded by Canadian Chartered Accountant Mich Sneddon, CPA, CA. A licensed mortgage agent with Canada’s leading mortgage lender Dominion Lending Centres Edge Financial, Sneddon has helped more than 20,000 Canadians learn about reverse mortgages. For more information, visit https://www.reversemortgagepros.ca
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