Canadian Reverse Mortgage Debt Just Made One Of The Biggest Jumps Ever

More Canadian seniors are withdrawing real estate wealth to make ends meet. Office of the Superintendent of Financial Institutions (OSFI) filings show the balance of reverse mortgage debt soaring in October. The annualized pace of growth is now at the highest level it has been in at least 8 years.
Reverse Mortgages
Have all your money in your house, but you need some extra cash to hold you over until the sweet release of death? That’s exactly what reverse mortgages are for – house rich, cash poor seniors. The borrower borrows against the equity in their home, and receives either a lump sum or regular payment. They’re similar to a home equity line of credit (HELOC), but a reverse mortgage is for someone 65 or older, and the borrowing rates are generally higher than a HELOC. Oh yeah, and you don’t have to make payments on these loans.
A reverse mortgage might seem like a good idea, but consider the demographic it targets. Seniors aren’t likely to get a windfall of new income in their golden years. This makes it unlikely they’ll be able to pay back their loan in a timely manner. Since they don’t have to make payments, it may not seem like a problem. However, borrowing at a relatively high rate while not making payments is a quick way to vaporize your net-worth.
Canadian Reverse Mortgage Debt Tops $3.42 Billion
Canadians sent the balance of reverse mortgage debt soaring. There was $3.425 billion in outstanding reverse mortgage debt in October, up 11.57% from the month before. The balance represents a 57.46% annualized pace of growth, a huge jump from last year. Actually, it was a huge jump from any point – setting a new record.
Canadian Reverse Mortgage Debt
The total of reverse mortgage debt held by regulated finacial instituitions, in Canadian dollars.
Month | Canadian Dollars (x1,000) |
---|---|
Jan 2010 | 652,938 |
Feb 2010 | 664,576 |
Mar 2010 | 680,588 |
Apr 2010 | 690,211 |
May 2010 | 704,812 |
Jun 2010 | 719,509 |
Jul 2010 | 728,990 |
Aug 2010 | 740,841 |
Sep 2010 | 754,490 |
Oct 2010 | 760,776 |
Nov 2010 | 760,776 |
Dec 2010 | 771,352 |
Jan 2011 | 788,836 |
Feb 2011 | 796,038 |
Mar 2011 | 810,705 |
Apr 2011 | 820,197 |
May 2011 | 836,899 |
Jun 2011 | 856,014 |
Jul 2011 | 862,897 |
Aug 2011 | 872,912 |
Sep 2011 | 889,554 |
Oct 2011 | 898,569 |
Nov 2011 | 916,360 |
Dec 2011 | 932,540 |
Jan 2012 | 938,429 |
Feb 2012 | 948,089 |
Mar 2012 | 959,663 |
Apr 2012 | 966,839 |
May 2012 | 978,235 |
Jun 2012 | 986,828 |
Jul 2012 | 995,023 |
Aug 2012 | 1,008,652 |
Sep 2012 | 1,023,826 |
Oct 2012 | 1,034,376 |
Nov 2012 | 1,048,627 |
Dec 2012 | 1,060,740 |
Jan 2013 | 1,068,448 |
Feb 2013 | 1,080,365 |
Mar 2013 | 1,091,601 |
Apr 2013 | 1,103,917 |
May 2013 | 1,110,370 |
Jun 2013 | 1,116,643 |
Jul 2013 | 1,128,247 |
Aug 2013 | 1,145,835 |
Sep 2013 | 1,159,878 |
Oct 2013 | 1,174,959 |
Nov 2013 | 1,188,322 |
Dec 2013 | 1,208,430 |
Jan 2014 | 1,215,007 |
Feb 2014 | 1,228,987 |
Mar 2014 | 1,243,595 |
Apr 2014 | 1,255,792 |
May 2014 | 1,274,423 |
Jun 2014 | 1,291,842 |
Jul 2014 | 1,298,548 |
Aug 2014 | 1,318,976 |
Sep 2014 | 1,335,018 |
Oct 2014 | 1,350,111 |
Nov 2014 | 1,364,494 |
Dec 2014 | 1,384,441 |
Jan 2015 | 1,393,026 |
Feb 2015 | 1,406,275 |
Mar 2015 | 1,420,013 |
Apr 2015 | 1,428,762 |
May 2015 | 1,447,484 |
Jun 2015 | 1,464,571 |
Jul 2015 | 1,486,448 |
Aug 2015 | 1,498,654 |
Sep 2015 | 1,513,281 |
Oct 2015 | 1,533,457 |
Nov 2015 | 1,544,868 |
Dec 2015 | 1,576,084 |
Jan 2016 | 1,583,909 |
Feb 2016 | 1,601,104 |
Mar 2016 | 1,633,115 |
Apr 2016 | 1,648,831 |
May 2016 | 1,668,329 |
Jun 2016 | 1,689,183 |
Jul 2016 | 1,704,984 |
Aug 2016 | 1,729,091 |
Sep 2016 | 1,755,888 |
Oct 2016 | 1,779,380 |
Nov 2016 | 1,811,878 |
Dec 2016 | 1,849,068 |
Jan 2017 | 1,865,410 |
Feb 2017 | 1,886,106 |
Mar 2017 | 1,929,941 |
Apr 2017 | 1,954,435 |
May 2017 | 1,994,618 |
Jun 2017 | 2,037,023 |
Jul 2017 | 2,060,723 |
Aug 2017 | 2,099,331 |
Sep 2017 | 2,132,482 |
Oct 2017 | 2,175,559 |
Nov 2017 | 2,649,688 |
Dec 2017 | 2,674,957 |
Jan 2018 | 2,697,416 |
Feb 2018 | 2,759,718 |
Mar 2018 | 2,817,477 |
Apr 2018 | 2,857,244 |
May 2018 | 2,914,436 |
Jun 2018 | 2,964,860 |
Jul 2018 | 2,994,624 |
Aug 2018 | 3,035,068 |
Sep 2018 | 3,070,378 |
Oct 2018 | 3,425,690 |
Source: Regulatory Filings, Better Dwelling.
Both the monthly and annual increase are record setting. The monthly increase is the second largest observed in 8 years of data available. It’s also 844% larger than the median monthly pace of growth. The annual increase is the largest in at least 8 years, and 274% larger than the median pace. It almost looked like Canadians were slowing down, but it made a massive increase instead.
Canadian Reverse Mortgage Debt Change
The annual percent change of reverse mortgage debt held by regulated finacial instituitions.
Month | Percent Change |
---|---|
Jan 2011 | 20.81 |
Feb 2011 | 19.78 |
Mar 2011 | 19.12 |
Apr 2011 | 18.83 |
May 2011 | 18.74 |
Jun 2011 | 18.97 |
Jul 2011 | 18.37 |
Aug 2011 | 17.83 |
Sep 2011 | 17.9 |
Oct 2011 | 18.11 |
Nov 2011 | 20.45 |
Dec 2011 | 20.9 |
Jan 2012 | 18.96 |
Feb 2012 | 19.1 |
Mar 2012 | 18.37 |
Apr 2012 | 17.88 |
May 2012 | 16.89 |
Jun 2012 | 15.28 |
Jul 2012 | 15.31 |
Aug 2012 | 15.55 |
Sep 2012 | 15.09 |
Oct 2012 | 15.11 |
Nov 2012 | 14.43 |
Dec 2012 | 13.75 |
Jan 2013 | 13.85 |
Feb 2013 | 13.95 |
Mar 2013 | 13.75 |
Apr 2013 | 14.18 |
May 2013 | 13.51 |
Jun 2013 | 13.15 |
Jul 2013 | 13.39 |
Aug 2013 | 13.6 |
Sep 2013 | 13.29 |
Oct 2013 | 13.59 |
Nov 2013 | 13.32 |
Dec 2013 | 13.92 |
Jan 2014 | 13.72 |
Feb 2014 | 13.76 |
Mar 2014 | 13.92 |
Apr 2014 | 13.76 |
May 2014 | 14.77 |
Jun 2014 | 15.69 |
Jul 2014 | 15.09 |
Aug 2014 | 15.11 |
Sep 2014 | 15.1 |
Oct 2014 | 14.91 |
Nov 2014 | 14.83 |
Dec 2014 | 14.57 |
Jan 2015 | 14.65 |
Feb 2015 | 14.43 |
Mar 2015 | 14.19 |
Apr 2015 | 13.77 |
May 2015 | 13.58 |
Jun 2015 | 13.37 |
Jul 2015 | 14.47 |
Aug 2015 | 13.62 |
Sep 2015 | 13.35 |
Oct 2015 | 13.58 |
Nov 2015 | 13.22 |
Dec 2015 | 13.84 |
Jan 2016 | 13.7 |
Feb 2016 | 13.85 |
Mar 2016 | 15.01 |
Apr 2016 | 15.4 |
May 2016 | 15.26 |
Jun 2016 | 15.34 |
Jul 2016 | 14.7 |
Aug 2016 | 15.38 |
Sep 2016 | 16.03 |
Oct 2016 | 16.04 |
Nov 2016 | 17.28 |
Dec 2016 | 17.32 |
Jan 2017 | 17.77 |
Feb 2017 | 17.8 |
Mar 2017 | 18.18 |
Apr 2017 | 18.53 |
May 2017 | 19.56 |
Jun 2017 | 20.59 |
Jul 2017 | 20.86 |
Aug 2017 | 21.41 |
Sep 2017 | 21.45 |
Oct 2017 | 22.27 |
Nov 2017 | 46.24 |
Dec 2017 | 44.67 |
Jan 2018 | 44.6 |
Feb 2018 | 46.32 |
Mar 2018 | 45.99 |
Apr 2018 | 46.19 |
May 2018 | 46.11 |
Jun 2018 | 45.55 |
Jul 2018 | 45.32 |
Aug 2018 | 42.32 |
Sep 2018 | 43.98 |
Oct 2018 | 57.46 |
Source: Regulatory Filings, Better Dwelling.
Reverse mortgage debt is soaring, at a record pace. This comes at a time while other segments of credit are seeing growth taper, and rates are climbing. All of this means reverse mortgages are likely to grow in cost upon renewal, eating equity at a faster rate.
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