Reverse Mortgage Endorsements Fall to Six-Year Low in September
Endorsements of federally backed home-equity conversion mortgages dropped to 1,790 loans in September, marking their lowest level in over six years according to data from Reverse Market Insight. The 6.7% decline from August’s total of 1,919 loans followed a broader market slowdown driven by surging interest rates and stricter borrower eligibility hurdles. Year-over-year volume fell 19% from 2,211 endorsements.
Interest Rates and Shrinking Loan-to-Value Ratios Drive Down Volume
Economic headwinds are restricting the borrowing power of older homeowners seeking reverse mortgages. A sharp rise in interest rates reduced the financial ratios that potential customers can draw from, pricing out applicants who qualified for loans just months prior.
Cliff Auerswald, president of Orange, California-based lender All Reverse Mortgage, noted that borrowers face significantly reduced loan-to-value limits alongside high third-party closing costs and insurance premiums. While incoming application case numbers held steady at approximately 3,000 per month between May and July, those applications failed to convert into final endorsements. Auerswald explained that lenders are encountering a high volume of leads that fall short at closing and prove dead on arrival.
Regional Endorsement Totals and Lender Activity Across the United States
Reverse mortgage activity declined across nine of the ten regions tracked by Reverse Market Insight during September. The Southwest region stood as the sole exception, with endorsements climbing 16.3% to 192 loans from a weak August baseline of 165.
The Pacific/Hawaii and Southeast/Caribbean regions recorded a virtual tie for the highest volume last month, logging 402 and 401 endorsements, respectively. Both territories experienced a roughly 7% decline from August figures. Meanwhile, the New York/New Jersey and Midwest regions suffered the steepest percentage losses, dropping over 20%. New York and New Jersey volume fell to 86 endorsements from 111, while Midwest activity finished at 146 compared to 184 in August.
Among the top three traditional HECM lenders, all experienced monthly endorsement declines in September:
* Finance of America led the industry for the month with 408 endorsements, down from 433 in August.
* Mutual of Omaha Mortgage, the leader on a rolling 12-month basis, recorded 366 endorsements, down from 395 a month prior.
* Longbridge Financial saw its endorsements fall to 342 from 357.
Referral Strategies Target Financial Planning and Tax Communities
Originators are adapting to the tighter lending environment by strengthening partnerships outside traditional channels.
Auerswald emphasized the value of working alongside financial planning communities and tax preparers. Financial planners share a natural alignment in protecting client assets, making referral networks a reliable avenue for originating loans in a high-rate market.
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