They’re Back – Baby Boomers and Reverse Mortgages
(Reuters) – U.S. baby boomers desperate for retirement income are increasingly turning back to a financial product that, after the housing bust, had been left for dead: the reverse mortgage.
Many retirees haven’t saved enough to cover expenses for the rest of their lives. But many of them have one major asset – a home. A reverse mortgage allows them to borrow against that, and they don’t have to make any payments on the loan until they move or die.
Borrowers took out $15.3 billion of the loans in 2013, an increase of 20 percent from the year before, according to industry publication Inside Mortgage Finance. The record year was 2009, when there were $30.21 billion of reverse mortgage loans made.
Brokers and bankers say the 77 million retiring baby boomers will likely help fuel further growth in the loans in the coming years, making the business a growth spot in a home loan market where volumes have recently been declining.
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