Canadian Reverse Mortgage Debt Just Made One Of The Biggest Jumps Ever

Dated: 12/27/2018

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Canadian Reverse Mortgage Debt Just Made One Of The Biggest Jumps Ever

More Canadian seniors are withdrawing real estate wealth to make ends meet. Office of the Superintendent of Financial Institutions (OSFI) filings show the balance of reverse mortgage debt soaring in October. The annualized pace of growth is now at the highest level it has been in at least 8 years.

Reverse Mortgages

Have all your money in your house, but you need some extra cash to hold you over until the sweet release of death? That’s exactly what reverse mortgages are for – house rich, cash poor seniors. The borrower borrows against the equity in their home, and receives either a lump sum or regular payment. They’re similar to a home equity line of credit (HELOC), but a reverse mortgage is for someone 65 or older, and the borrowing rates are generally higher than a HELOC. Oh yeah, and you don’t have to make payments on these loans.

A reverse mortgage might seem like a good idea, but consider the demographic it targets. Seniors aren’t likely to get a windfall of new income in their golden years. This makes it unlikely they’ll be able to pay back their loan in a timely manner. Since they don’t have to make payments, it may not seem like a problem. However, borrowing at a relatively high rate while not making payments is a quick way to vaporize your net-worth.

Canadian Reverse Mortgage Debt Tops $3.42 Billion

Canadians sent the balance of reverse mortgage debt soaring. There was $3.425 billion in outstanding reverse mortgage debt in October, up 11.57% from the month before. The balance represents a 57.46% annualized pace of growth, a huge jump from last year. Actually, it was a huge jump from any point – setting a new record.

Canadian Reverse Mortgage Debt

The total of reverse mortgage debt held by regulated finacial instituitions, in Canadian dollars.

Canadian Dollars (x1,000)Jan 2010Apr 2010Jul 2010Oct 2010Jan 2011Apr 2011Jul 2011Oct 2011Jan 2012Apr 2012Jul 2012Oct 2012Jan 2013Apr 2013Jul 2013Oct 2013Jan 2014Apr 2014Jul 2014Oct 2014Jan 2015Apr 2015Jul 2015Oct 2015Jan 2016Apr 2016Jul 2016Oct 2016Jan 2017Apr 2017Jul 2017Oct 2017Jan 2018Apr 2018Jul 2018Oct 2018$0$500,000$1,000,000$1,500,000$2,000,000$2,500,000$3,000,000$3,500,000Canadian Dollars (x1,000)
MonthCanadian Dollars (x1,000)
Jan 2010652,938
Feb 2010664,576
Mar 2010680,588
Apr 2010690,211
May 2010704,812
Jun 2010719,509
Jul 2010728,990
Aug 2010740,841
Sep 2010754,490
Oct 2010760,776
Nov 2010760,776
Dec 2010771,352
Jan 2011788,836
Feb 2011796,038
Mar 2011810,705
Apr 2011820,197
May 2011836,899
Jun 2011856,014
Jul 2011862,897
Aug 2011872,912
Sep 2011889,554
Oct 2011898,569
Nov 2011916,360
Dec 2011932,540
Jan 2012938,429
Feb 2012948,089
Mar 2012959,663
Apr 2012966,839
May 2012978,235
Jun 2012986,828
Jul 2012995,023
Aug 20121,008,652
Sep 20121,023,826
Oct 20121,034,376
Nov 20121,048,627
Dec 20121,060,740
Jan 20131,068,448
Feb 20131,080,365
Mar 20131,091,601
Apr 20131,103,917
May 20131,110,370
Jun 20131,116,643
Jul 20131,128,247
Aug 20131,145,835
Sep 20131,159,878
Oct 20131,174,959
Nov 20131,188,322
Dec 20131,208,430
Jan 20141,215,007
Feb 20141,228,987
Mar 20141,243,595
Apr 20141,255,792
May 20141,274,423
Jun 20141,291,842
Jul 20141,298,548
Aug 20141,318,976
Sep 20141,335,018
Oct 20141,350,111
Nov 20141,364,494
Dec 20141,384,441
Jan 20151,393,026
Feb 20151,406,275
Mar 20151,420,013
Apr 20151,428,762
May 20151,447,484
Jun 20151,464,571
Jul 20151,486,448
Aug 20151,498,654
Sep 20151,513,281
Oct 20151,533,457
Nov 20151,544,868
Dec 20151,576,084
Jan 20161,583,909
Feb 20161,601,104
Mar 20161,633,115
Apr 20161,648,831
May 20161,668,329
Jun 20161,689,183
Jul 20161,704,984
Aug 20161,729,091
Sep 20161,755,888
Oct 20161,779,380
Nov 20161,811,878
Dec 20161,849,068
Jan 20171,865,410
Feb 20171,886,106
Mar 20171,929,941
Apr 20171,954,435
May 20171,994,618
Jun 20172,037,023
Jul 20172,060,723
Aug 20172,099,331
Sep 20172,132,482
Oct 20172,175,559
Nov 20172,649,688
Dec 20172,674,957
Jan 20182,697,416
Feb 20182,759,718
Mar 20182,817,477
Apr 20182,857,244
May 20182,914,436
Jun 20182,964,860
Jul 20182,994,624
Aug 20183,035,068
Sep 20183,070,378
Oct 20183,425,690

Source: Regulatory Filings, Better Dwelling.

Both the monthly and annual increase are record setting. The monthly increase is the second largest observed in 8 years of data available. It’s also 844% larger than the median monthly pace of growth. The annual increase is the largest in at least 8 years, and 274% larger than the median pace. It almost looked like Canadians were slowing down, but it made a massive increase instead.

Canadian Reverse Mortgage Debt Change

The annual percent change of reverse mortgage debt held by regulated finacial instituitions.

Percent ChangeJan 2011Apr 2011Jul 2011Oct 2011Jan 2012Apr 2012Jul 2012Oct 2012Jan 2013Apr 2013Jul 2013Oct 2013Jan 2014Apr 2014Jul 2014Oct 2014Jan 2015Apr 2015Jul 2015Oct 2015Jan 2016Apr 2016Jul 2016Oct 2016Jan 2017Apr 2017Jul 2017Oct 2017Jan 2018Apr 2018Jul 2018Oct 20180102030405060Percent
MonthPercent Change
Jan 201120.81
Feb 201119.78
Mar 201119.12
Apr 201118.83
May 201118.74
Jun 201118.97
Jul 201118.37
Aug 201117.83
Sep 201117.9
Oct 201118.11
Nov 201120.45
Dec 201120.9
Jan 201218.96
Feb 201219.1
Mar 201218.37
Apr 201217.88
May 201216.89
Jun 201215.28
Jul 201215.31
Aug 201215.55
Sep 201215.09
Oct 201215.11
Nov 201214.43
Dec 201213.75
Jan 201313.85
Feb 201313.95
Mar 201313.75
Apr 201314.18
May 201313.51
Jun 201313.15
Jul 201313.39
Aug 201313.6
Sep 201313.29
Oct 201313.59
Nov 201313.32
Dec 201313.92
Jan 201413.72
Feb 201413.76
Mar 201413.92
Apr 201413.76
May 201414.77
Jun 201415.69
Jul 201415.09
Aug 201415.11
Sep 201415.1
Oct 201414.91
Nov 201414.83
Dec 201414.57
Jan 201514.65
Feb 201514.43
Mar 201514.19
Apr 201513.77
May 201513.58
Jun 201513.37
Jul 201514.47
Aug 201513.62
Sep 201513.35
Oct 201513.58
Nov 201513.22
Dec 201513.84
Jan 201613.7
Feb 201613.85
Mar 201615.01
Apr 201615.4
May 201615.26
Jun 201615.
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Steven Axford

Steve Axford grew up in Victoria, BC and has always been active in his community. Steve is a Victoria Cougars Hockey Team alumni as well as a Victoria Shamrocks (intermediate) alumni. During his time....

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