The resurgence of other home equity mining companies in recent years has sparked interest in the reverse mortgage industry because of the company’s potential to compete with the business of seniors. Whether these are arrangements like sale-leasebacks or equity-sharing investments, these products could serve as an alternative to a debt-based option for those looking to unlock some of their equity. home and access additional cash flow.
To assess the performance of this company, especially among the elderly after the COVID-19 coronavirus pandemic, Reverse Mortgage Daily contacted the executives of three companies: Point, QuantmRE (both of which offer equity investment products) and EasyKnock (which offers a sale-leaseback). While the average age of clients of these leading alternative capital operating companies has remained stable over the past 18 months since the start of the pandemic, all companies are seeing both increased awareness among seniors, as well as an interest in responding to them.
Seniors’ response to the alternative exploitation of equity since COVID-19 start
In each of the three companies that RMD spoke with, most agree that interest in their alternative products has grown universally, as opposed to an increase within a single demographic.
âOver the past 18 months, we have seen a significant increase in requests from all homeowners, including requests from seniors who now realize that there are alternative debt-free financial tools available to them,â said Matthew Sullivan. , founder and CEO of QuantmRE. “These home equity deals allow them to access increased home equity without monthly payments or additional debt.”
At Point, CEO Eoin Matthews notes that the company is on track for a year of explosive growth in 2021, due in large part to senior interest in the company’s offerings.
âThe demand for Point’s home equity investing (HEI) has grown tremendously over the past 12 months, and seniors are a big part of it,â Carr said. âThis has been particularly true in 2021 where we are on track for 400% growth since the start of the year. “
For EasyKnock, the company declined to share details regarding a demographic breakdown, but instead indicated that its sale-leaseback offers were of particular interest to seniors over other options for leveraging equity. That’s according to EasyKnock’s Marketing Director Jeff Carr.
âThey really love the product, have the flexibility to stay but enjoying life is paramount,â Carr told RMD. âFor the elderly, our product can be particularly meaningful. More often than not, we help them discover the possibility of staying in the house they know and love, where they have invested their time and money, where they have raised their children, where they feel comfortable.
In terms of the awareness that seniors demonstrate of these alternative options, QuantmRE and EasyKnock describe that increased interest in their offerings is growing evenly across several demographic groups, as these products do not come with age restrictions, although QuantmRE notes that he saw additional requests from the elderly. However, in Point’s case, the overwhelming majority of the clients it serves are in or near the reverse mortgage demographic, according to Matthews.
âOver 65% of Point’s customer base consists of seniors and seniors (50+), so there is definitely a strong uptake from older owners,â he explained. âAs older people explore solutions for freeing up equity, SEAs are increasingly an attractive option, especially for older people looking to hold onto a low-cost first mortgage or for those who are not in the process. in the Home Equity Conversion Mortgage (HECM) category. “
While seniors are more likely to be approved for a reverse mortgage compared to more traditional options for using equity, according to a recent Urban Institute study, QuantmRE’s Matthew Sullivan notes that more than $ 8 million of homeowners were turned down for a mortgage loan in 2020, and an average FICO credit score among most borrowers of 760 can increase the difficulty of qualifying for mortgage financing.
âHome equity deals can help homeowners with enough equity to qualify for a reverse mortgage if they’ve already been rejected due to credit rating issues,â Sullivan said. .
At the end of pandemic relief programs, older people may seek other alternatives
As the federal government and those of states, counties and local communities begin to phase out some relief programs designed to help homeowners facing financial hardships created by the pandemic, the availability of options for leveraging equity capital outside of the realm of debt-based mortgages is something these companies all feel to varying degrees of anticipation.
âWith the end of many pandemic assistance programs, homeowners who have yet to recover financially from the impact of the pandemic are looking for solutions,â Matthews said. âWhether it’s related to a pandemic or not, we’re seeing a lot more homeowners coming to us after being referred by family or friends and reviewing the HEI product extensively online. “
Similar trends are seen at QuantmRE, according to Sullivan.
âWe have found that more people have responded to our ads and marketing and are willing to learn more about their home equity deals as their other options have become limited,â he said. . âAs the pandemic has forced more and more people to get used to doing their research online, we have seen a greater response to our online advertising and podcasts. “
Part of this new motivation may come from higher house prices now compared to the start of the pandemic, he said.
âHomeowners seem more motivated to take advantage of the increase in their home equity since the start of the pandemic and are drawn to the prospect of being able to receive a lump sum in cash without any corresponding monthly payment. As a result, we believe the use of home equity agreements across all demographic groups is at historic highs. “
The future of seniors and the alternative use of equity
As the reverse mortgage industry continues to explore ways to innovate in product development and consumer education to increase awareness among American seniors about reverse mortgage products, alternative companies operating the equity seems poised to focus more on the elderly as a potential growth tool.
â76% of households aged 50 and over own their home. Thanks to home appreciation and years of mortgage principal repayment, these homeowners have significant equity, âMatthews said, citing data from Harvard University’s Joint Center of Housing Studies describing a median value of $ 115,000 for households aged 50 and over, and a median of $ 143,500. for households aged 65 and over.
For EasyKnock’s leaseback deals, seniors remain a powerful demographic for potential growth, Carr said.
âAs our senior population grows and more people look to age in place, EasyKnock is an attractive option for them to convert equity into cash while staying in the comfort of their own homes,â a- he declared. âEvery homeowner looking for a solution is important to us, but we certainly recognize that our product can be particularly useful for the elderly. Ensuring that we are adequately meeting the needs of seniors is a constant priority.
Likewise, at QuantmRE, seniors will be a major focus of the company’s operations going forward, Sullivan said.
âThe demographics of seniors have and will be an important part of the future of the company,â he explained. âUsually, the demographic of seniors indicates higher participation compared to other age groups, but [â¦] it changes. As the education level of older people increases (either through direct marketing or through trusted third parties such as financial intermediaries), we expect to see an increase in the adoption of value agreements. home equity from the elderly.