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

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.

Canadian Dollars (x1,000)Jan 2010Apr 2010Jul 2010Oct 2010Jan 2011Apr 2011Jul 2011Oct 2011Jan 2012Apr 2012Jul 2012Oct 2012Jan 2013Apr 2013Jul 2013Oct 2013Jan 2014Apr 2014Jul 2014Oct 2014Jan 2015Apr 2015Jul 2015Oct 2015Jan 2016Apr 2016Jul 2016Oct 2016Jan 2017Apr 2017Jul 2017Oct 2017Jan 2018Apr 2018Jul 2018Oct 2018$0$500,000$1,000,000$1,500,000$2,000,000$2,500,000$3,000,000$3,500,000Canadian Dollars (x1,000)
MonthCanadian 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.

Percent ChangeJan 2011Apr 2011Jul 2011Oct 2011Jan 2012Apr 2012Jul 2012Oct 2012Jan 2013Apr 2013Jul 2013Oct 2013Jan 2014Apr 2014Jul 2014Oct 2014Jan 2015Apr 2015Jul 2015Oct 2015Jan 2016Apr 2016Jul 2016Oct 2016Jan 2017Apr 2017Jul 2017Oct 2017Jan 2018Apr 2018Jul 2018Oct 20180102030405060Percent
MonthPercent 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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Contributing editor, stats guy.

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