Canadian seniors are picking up the pace they extract equity from their homes. Office of the Superintendent of Financial Institutions (OSFI) filings show reverse mortgage debt reached an all-time high in September. The all-time high comes with a mild acceleration to an already very large growth rate.
What Is A Reverse Mortgage?
Reverse mortgages are loans secured against the equity in your home. Seniors, aged 55 and up, borrow their equity as a lump sum or installment payments. They’re kind of like a HELOC, but payments aren’t required. Instead, payments only need to be made when you leave the house – usually by death, default, or sale.
No, this is far from a charitable cause. For the privilege of no fixed payments, you’ll generally pay a higher interest rate than a HELOC. Since loan repayment isn’t on fixed terms, the interest quietly racks up in the background. The balance of the reverse mortgage debt could snowball very quickly for those that don’t pay it off. That means the total balance held by banks is fast growing, before you add new loans. This number should rip higher for some time, especially with Canada’s aging population.
Canadian Reverse Mortgage Debt Tops $3.88 Billion
Canadians added almost a billion in reverse mortgage debt to the pile. The balance outstanding is $3.88 billion as of September, up 1.32% from the month before. This represents a 26.43% increase compared to the same month last year. If you’re looking for dollar amounts, it was $50.82 million in September alone, and $811.62 million from the last year. Reverse mortgage debt for the month prints another consecutive all-time high.
Canadian Reverse Mortgage Debt
The total of reverse mortgage debt held by regulated finacial instituitions, in Canadian dollars.
Source: Regulatory Filings, Better Dwelling.
The record highs aren’t going to stop any time soon, considering the huge growth rate. The 26.43% growth in September is a slight acceleration from the month before. This is something observed with most housing debt recently. Over the past few months, the 12-month rate of growth has been relatively consistent. Even though September’s growth rate is 39.90% lower than the same month last year, it’s still very large.
Canadian Reverse Mortgage Debt Change
The annual percent change of reverse mortgage debt held by regulated finacial instituitions.
Source: Regulatory Filings, Better Dwelling.
Reverse mortgage debt reached a new all-time high, with growth even accelerating slightly. The acceleration is small, but this is a trend we’ve seen with most mortgage debt. That is, mortgage debt has been accelerating in most segments. Still smaller than last year, but speed is returning.
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They need to amortize these loans like they do in Quebec with credit cards. Perpetual debt is essentially a form of slavery.
The whole Canadian economy is based on using your house as a retirement plan.
Good article from the forum on the reverse mortgage boom during the US housing bubble. They only started to fall apart recently. People that forget (as seniors do), to pay one or two bills. Boom, they’re in foreclosure.
https://www.usatoday.com/in-depth/news/investigations/2019/06/11/seniors-face-foreclosure-retirement-after-failed-reverse-mortgage/1329043001/
This where Canadian growth and Canadian Banks stock high are coming from. Wondering why Canadian bank where doing so good.
this is the tenth time te article is being recycled… BW, you can do better than this man… this website had so much more potential when it began. now it is the same 5 templates being recycled over and over again..
please find new angles or new topics. I’d be really interested to hear stories of failed flipping or the actual cost of flipping properties
or interview people who falsified their mortgage application.
real investigative journalism~
I have to agree. The data gets updated regularly which is nice, but it really does feel like recycling templates.
New perspectives would help a lot.
100% agree.
It’s almost like monthly reports come out monthly, nitwit.
Millenials and Zoomers have to work for free to get job experience to get hired for a paid job. Seniors (is 55 actually that old) bought their houses cheaply while working in a GM factory or packing bags in a supermarket, and also could afford to marry and raise a typical suburban family.
Agree
Cut and paste,was much better and more informative when they first came out.
Not disagreeing, but it’s funny how no one says that about Bloomberg or Canadian Press when they do monthly reports. Same cut and paste/insight. The difference is people that expect free stuff always seem to be critical of things, when people pay $24k/year they know what to expect.
Just saying it used to be better,didn’t mean to offend you.