September 2, 2010
It’s always more fun to report good news (since no one shoots the messenger in these cases!) and August continued a welcome trend higher in reverse mortgage business volumes. Endorsements were up 12.6% from July, again coming in ahead of increases in competition since the trough in May.
We also saw modest success in applications, coming in at 8,961 for the month of July. While that’s lower than June’s figure by 1.4%, there is a reason to be hopeful here. First, the updated chart with applications and endorsements (with timing adjusted 4 months for endorsements):
This first chart shows endorsement volumes following nicely along our application path, but the second chart shows a more optimistic trend in applications than the raw number suggests:
July had 2 fewer business days than June, which turns a -1.4% decline in the raw number to 8% growth in the per business day results. If we maintained the same pace in August (with 23 business days like June), then we would have been over 9,800 applications.
Lots of additional trend data and analysis is available in the full report by clicking the image below. Enjoy!
August 17, 2010
Another month in the rear view mirror, and we’ve officially reached the halfway point for the year. We’ve already seen a bounce in volumes from the May low and signs of life from the broker side of our industry, but who are the winners and losers among the states and metro markets around the country?
- Texas and Maryland continue to outperform among the top 10 states, down -26% and -23%, respectively
- Maryland’s strength is mostly attributable to the mini refi boom in Baltimore, which remains the only positive performer among the top 10 cities, up 12%
- Houston is the engine for Texas, down just -11%
- Philadelphia is a surprising metro we haven’t talked much about lately, but is down just -5% from last year at this time
- California has a virtual lock on average loan size growth, with 9 of the top 10 cities – but looking at total loan volume growth is an entirely different story. New Orleans, Baltimore, Tulsa and Santa Fe all rang up more loan volume by Maximum Claim Amount dollars than last year.
Click on the image below to view the full Industry Trends report for this month.
August 9, 2010
After a very tough May for the reverse mortgage broker business, June provided a welcome bounce that almost kept pace with retail/direct endorsements. Broker volume grew 15.2% while retail/direct grew slightly faster at 17.6% as the overall business regained some traction from May’s trough levels. Retail/direct volumes have continued to outpace broker loans, continuing the trend started last month but we’ll wait a while before calling this the new world order for reverse.
One of the interesting trends we’re watching is the consolidation of lending in the reverse mortgage market toward fewer, larger lenders. We’ve written about this before, and it’s an interesting complementary perspective to the count of active lenders and average loans per lender.
Here’s a good illustration:
- In 2008, there were 2,950 active lenders, compared to 3,151 in 2009
- The 100 largest lenders for 2008 shrank -6.8% in 2009, but the other 2,850 lenders actually grew by 4.6%
- The number of lenders shrank from 2,483 in Jan-Jun 2009 to 1,883 in 2010
- The 100 largest lenders for Jan-Jun 2009 shrank -42.2%, while the other 2,383 shrank a smaller -32.6%
So if the number of lenders is shrinking but the largest lenders aren’t staying ahead of the market as a group, what is the tradeoff? Survival.
- Only one among the top 100 2008 lenders was not active in 2009 (1%), compared to 827 disappearances among the other 2,850 (29%)
- It got worse for both groups in 2010, with 3 of the top 100 2009 lenders gone (3%), but a whopping 1,136 (47.7%) of the smaller lenders leaving the business
Of course, there were certainly some big winners among the survivors among non top 100 lenders in both years, otherwise the growth rates would be lagging the top 100. It’s never been easy to be small, but right now the risk/reward is more exaggerated than ever.
Big may not be beautiful these days but it’s a lot less ugly than being small.
Be sure to click the link below to access the full report:
