Reverse Mortgage Guide

Given the mortgage mess, stock market declines and growing levels of unemployment what do you think is happening with retirement plans?

A study by the Pew Research Center for the People & The Press says while folks are cutting back, relatively few are changing retirement plans:

“The public’s belt tightening extends to other major purchases as well. Nearly four-in-ten say they have delayed or canceled plans to buy a new home or make major home improvements because of the recent economic downturn (38%) and a nearly identical percentage say they have delayed or canceled plans to buy a major home appliance such as a computer (39%). Some 36% now say they have delayed or canceled plans to buy a new car, up 13 points over the past few weeks alone.

“In addition to reduced spending, about half of the public (48%) has changed the way their money is saved or invested because of what’s been happening with the economy lately. However, most do not see the current economic crunch as affecting their retirement as of yet: Just more than a quarter (26%) say they have adjusted their plans for retirement, up only three points from Sept. 19-22.”

The report was issued October 15th and to put this as nicely as possible, I view it as a lagging indicator — that is, correct and in context at the time but superceded by events since the report was issued.

I expect more and more people to change their retirement plans as the enormity of the economic mess is revealed. Consider some of the news since October 15th:

___ Detroit is begging for additional billions.

___ 240,000 jobs were lost in October

___ The Dow Jones Industrial Average stood at 8,577.91 on October 15 — and was at 8,943.81 by November 7th. That sure sounds like good news — until you realize that the 52-week high was 13,990.65.

In other words, when next the good folks at the Pew Research Center survey the public the expectation here is that lots and lots of prospective retirees are going to say, nah, maybe we need to hold onto our jobs and defer retirement just a touch.

You can see this with reverse mortgages. Actual FHA reverse mortgage endorsements for the first two weeks of October amounted to 4,921 — that’s up 28.2 percent from a year ago.

Seems good — but look at the applications. You can’t have future endorsements unless you have current applications and HUD reports HECM applications totaled 6,232 for the first two weeks of October — that’s down 11.1 percent from the same period in 2007 and a hint of things to come.

For the full report, see: Public Not Desperate About Economy or Personal Finances

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This entry was posted on Wednesday, November 12th, 2008 at 5:58 am and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.