October numbers are in and the month proved more trick than treat for HECM volume, down 7.4% from September. This isn’t a reflection on the demand that was pulled forward into the last week of September by the announcement of a very fast principal limit reduction implementation, as we don’t expect that surge and subsequent slowdown in volumes to flow through these numbers until December.
One bright spot is that competition went down considerably more than unit volume, which is positive news for everyone left standing (though not for those that didn’t see any loans and might have left the business entirely).
- Volume: We’re now off last year’s pace by 1.8% after several months of break-even performance. We’re still within striking distance of logging another growth year for the industry, but it’s looking more and more likely that we may put in the first negative calendar year performance as an industry since 2000 and only the third down year ever (1996 being the other).
- Pacific/Hawaii: Almost all of the decline from September was in the Pacific/Hawaii region that has been in recovery mode this year after two very tough years in 2007-08. The region accounted for 63% of the volume drop, although volume per lender is still up 11% from last year, reflecting reduced competition. The story continues to be a move toward the coast, as Fresno and Las Vegas are both down more than 50% while San Francisco is up 88% and LA is up 26%.
- Lenders: Just 3 of the top 10 lenders increased their volume in October, with Wells Fargo taking the biggest leap in unit terms while Metlife and One Reverse both saw impressive percentage growth gains. Despite having more decliners than gainers, the top 10 still increased their share of the total market to 44% from 40% last month.
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