Retail Leaders – December 2009
January 5, 2010
The December 2009 endorsement data has been put out by HUD, bringing us to the conclusion of a tumultuous year in the reverse mortgage industry. Endorsement volume climbed 7% from November levels to 8,284 units. Volume for the year ended at 111,924 endorsements, a 2.8% decrease from 2008.
The fourth quarter was significantly weaker than the rest of the year, with volume for the quarter 18% lower than Q1, 14% below Q2, and 12% lower than Q3. This is a trend we’ve seen over the past three years, but the Q4 drop off was far more significant this year than in the past. The question now becomes, will we see the same patterns develop throughout 2010?
Active lenders increased 6% from 2008 levels to 3,123 for the year. For the month of December, the number of new lenders entering the market continued the long march downward. If we look at the number of active lenders on a quarterly basis, Q4-2009 had the lowest number of competitors since Q4-2007 (see graph below). There is clearly a downtrend (or at least the start of one) in the number of lenders doing business, and marks the first time we’ve seen this in the endorsement data. We believe this is a positive development for this industry, as the lengthy sales cycle weeds out those who were only here for the hype.
Click the image below for the full report.
The graph shows that Q1 is typically the strongest for each year. In Q1 2010 I expect a significant decrease in volume as compared to prior years, lower than Q1 2007 and likely lower than Q4 2009.