Boomers Keeping Canadian Economy a FLOAT ?

Canadian seniors are picking up the pace they extract equity from their homes. Office of the Superintendent of Financial Institutions (OSFI) filings show reverse mortgage debt reached an all-time high in September. The all-time high comes with a mild acceleration to an already very large growth rate.

What Is A Reverse Mortgage?
Reverse mortgages are loans secured against the equity in your home. Seniors, aged 55 and up, borrow their equity as a lump sum or installment payments. They’re kind of like a HELOC, but payments aren’t required. Instead, payments only need to be made when you leave the house – usually by death, default, or sale.

No, this is far from a charitable cause. For the privilege of no fixed payments, you’ll generally pay a higher interest rate than a HELOC. Since loan repayment isn’t on fixed terms, the interest quietly racks up in the background. The balance of the reverse mortgage debt could snowball very quickly for those that don’t pay it off. That means the total balance held by banks is fast growing, before you add new loans. This number should rip higher for some time, especially with Canada’s aging population.

Canadian Reverse Mortgage Debt Tops $3.88 Billion
Canadians added almost a billion in reverse mortgage debt to the pile. The balance outstanding is $3.88 billion as of September, up 1.32% from the month before. This represents a 26.43% increase compared to the same month last year. If you’re looking for dollar amounts, it was $50.82 million in September alone, and $811.62 million from the last year. Reverse mortgage debt for the month prints another consecutive all-time high.