HECM originations sink to lowest level since 2020, HMBS issuance down 17% in September

The recent decline in Home Equity Conversion Mortgage (HECM) originations and Home Mortgage-Backed Securities (HMBS) issuance is a concerning trend for the construction industry, particularly in the realm of residential development and renovation. With HECM endorsements hitting a low of 1,790 in September, the lowest since April 2020, it's clear that the market for reverse mortgages is experiencing a slowdown.

This decrease in HECM originations and HMBS issuance can have a ripple effect on the construction industry, as reverse mortgages often enable seniors to tap into their home equity to fund home repairs, renovations, and other projects. A decline in this type of financing can lead to reduced demand for construction services, potentially impacting contractors, builders, and suppliers. Furthermore, a decrease in HMBS issuance can also impact the liquidity of lenders, making it more challenging for them to offer construction financing and other types of mortgages.

As the construction industry continues to navigate a complex and often unpredictable market, it's essential to watch the trends in HECM originations and HMBS issuance closely. The next key indicator to monitor will be the October data, which will provide further insight into whether this decline is a temporary setback or a sustained trend. Additionally, industry stakeholders should keep a close eye on regulatory developments and changes in government policies that may impact the reverse mortgage market and, in turn, the construction industry.

Originally reported by housingwire.com. ConstructionNews adds analysis for real estate & property readers.