January HECM endorsement numbers were underwhelming, but we’re not throwing in the towel on the year because we see positive developments just around the corner. We also have December application numbers to update a long-running chart series, so let’s dig in.
First, endorsement volumes for January came in at 6,464, down -1.4% from December and down -15.3% from January 2010. Sounds like a downer, until we see that active lenders fell an astonishing -34.5%, resulting in net average loans per lender rising 29.4%. This continues the theme we discussed in last month’s Retail Leaders report, as reduced competition salves the would of declining volumes.
While there were 18.9% more active lenders in January compared to December, the overall trend continues to show more production per lender.
So why would we title this post so bullishly when we’re reporting a volume decline from both last month and last year? Because we believe year over year growth is only a month or two away. The chart below shows the past 12 months volume in blue and comparable months from prior year in gray.
Barring an unexpected dip in volume, the lines should cross in February or March, indicating year over year growth. The chart below shows net year over year comparisons for endorsements and applications for the past 12 months, a perspective which shows even more reason for optimism.
Any reading above zero indicates here that volumes were greater than the same month last year. The last three months of 2010 each showed an increase of 1,300 or more applications, which should translate into growth of 1,000 or more endorsements per month as they start showing up. We generally expect endorsements to trail applications by 4 months, which means February, but even if we allow for some noise around the September fiscal year program change rush, March should show gains compared to 2010.
There is still reason for concern given that application volumes haven’t been flat in the past three months after eight months of steady growth from Jan-Aug.
This will be a growth year because we were so low to start 2010, but if it’s going to be special we’ll need to see application volumes back above 10,000 per month.
Click on the image below for this month’s report.