The rate on a CHIP Home Income Plan reverse mortgage dropped to 3.75 per cent today, down from 4.95 per cent, as a result of HomEquity's recent transformation to a chartered bank.
"Becoming a Schedule 1 Bank has allowed us to lower our rates because we now raise funding the same way that other banks do," said Greg Bandler, senior vice-president of HomEquity Bank, adding the company is seeing more demand for reverse mortgages due to the growing population of seniors in Canada.
Along with the lowered rate, HomEquity Bank - which now issues GICs - is also offering a discount program for customers who pay their full interest annually. The program reduces the interest rate on a CHIP mortgage to as low as 3.25 per cent.
At the end of September, HomEquity's reverse mortgage portfolio totaled about 7,000 with an accrued value of $837 million. The company provides reverse mortgage products directly to consumers as well as through referrals from banks, financial planners and mortgage brokers.