Reverse Mortgage Market Faces Difficult Second Half of 2026

The reverse mortgage market is anticipated to face significant challenges in the latter half of 2026, primarily driven by persistently elevated mortgage rates and ongoing affordability pressures. These factors are expected to restrict the amount of home equity older homeowners can access, despite many seniors holding substantial equity in their properties. Shain Urwin, national reverse mortgage director for C2 Financial and a board member of the National Reverse Mortgage Lenders Association (NRMLA), described the current lending environment as one of the most difficult he has encountered. He expressed caution regarding the final six months of 2026, suggesting it will be harder to access equity and that the year may be remembered as one of the toughest for lending.

While demand for reverse mortgages has stabilized compared to the previous year, industry professionals do not foresee an immediate improvement in borrowing conditions. The Home Equity Conversion Mortgage (HECM) market is projected to remain "steady," according to Kristy Osborn, a mortgage equity planner at Fairway Independent Mortgage Corp. Osborn noted that borrowers are beginning to return after a lag in 2025, which was attributed to interest rates impacting the amount of equity older homeowners could tap into. The industry's outlook indicates a stabilized but constrained market.

Data from Reverse Market Insight reveals that the top 100 Home Equity Conversion Mortgage (HECM) retail lenders originated 2,064 loans in June 2026. This figure represents a 6% increase from May 2026 but a decrease of over 8% when compared to the 2,244 loans originated in June 2025. Earlier in 2026, analysts had pointed to increased competition from proprietary reverse mortgage products as a contributing factor to softer HECM volume. The continued impact of interest rates on equity access remains a central concern for the sector.