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HECMs got more popular in March, data shows 2010-04-23 Home equity conversion mortgages, a type of reverse mortgage, surged in popularity last month. According to the Federal Housing Administration, the number of HECM applications jumped from 6,643 in February to 7,398 in March - an increase of 11.4 percent. The news comes as home buying activity is spiking. Both new- and existing-home sales are up sharply; earlier this week, the National Association of Realtors reported that existing-home sales rose 6.8 percent between February and March. And today, the Commerce Department revealed that new-home sales jumped 27 percent last month - the greatest month-on-month increase observed in more than 40 years. While the pace won't be sustainable - the rise in home sales is driven by the homebuyer tax credit, which is expiring at the end of this month - it may suggest that the housing market is picking up steam. And older homeowners appear more willing to take out a reverse mortgage than they were just a few months ago. If sales can remain reasonably strong, home prices will continue to rebound. A rise in home values would bode well for people considering a reverse mortgage: When homes are worth more, reverse mortgage loans can be larger.  |
