Reverse mortgage debt has hit all-time high of over $4 billion in December, according to a Better Dwelling report.
The report looked at filings from the federal Officer of the Superintendent of Financial Institutions (OSFI) and found that reverse mortgage debt increased by 0.69% from November 2019 to $4.01 billion. That figure also represented an increase of 13% from the same period in the previous year.
Read more: Leading reverse mortgage lender saw record-high deals last year
Despite rising debt levels, however, the growth rate of reverse mortgages continues to decline – with Better Dwelling saying that the 13% year-on-year increase for December was the lowest growth rate in seven years.
A reverse mortgage provides loans to senior citizens in exchange for equity against their home, with payment occurring upon death or the sale of the property. This gives seniors a source of income for retirement while allowing them to stay in their homes.
Interest rates for reverse mortgages, however, are often higher than a HELOC that will eventually “wear down equity more than the borrower may expect,” according to Better Dwelling.