With tappable home equity at record levels, can reverse mortgage lenders attract more borrowers?

Article Summary

First American Data & Analytics defines accessible equity as the share of a homeowner’s equity that can be borrowed while keeping the combined loan-to-value ratio at 80% or lower. The company also measures locked-in accessible equity by factoring in the homeowner’s current mortgage rate versus prevailing market rates, adding a layer that reflects how reluctant borrowers may be to refinance or sell.

“Understanding home equity across markets requires more than tracking home values alone,” Matt Key, the company’s vice president of property data, said in a statement. “By connecting property and mortgage data, we can provide a more complete view of estimated equity availability and mortgage rate conditions, helping industry professionals understand how those factors vary across markets and where they may be able to help homeowners leverage their equity to solve challenges or enhance their residences.”

Lock-in patterns remain firmly in place

First American’s Q2 2026 data shows how strongly low-rate mortgages continue to influence housing behavior. The firm placed the national average 30-year fixed mortgage rate at 6.49% at the end of June 2026, a level that has since climbed by nearly a full percentage point.

Almost 90% of accessible equity was held by borrowers whose primary mortgage rate was below that 6.49% benchmark, and 87% of locked-in accessible equity was classified by the company as either “severe” or “extreme” lock-in.

“Compiling this unique dataset creates a new lens into the scale of the mortgage rate lock-in effect at the national, state and market level,” said Genaro Villa, senior economist at First American Data & Analytics. “Many homeowners secured mortgages at record-low rates in 2020 and 2021 and saw their equity surge as home price appreciation soared during the pandemic-era housing boom.

For housing professionals, that mix of substantial equity and strong lock-in helps explain subdued listing inventory, muted cash-out refinance activity relative to equity levels, and rising interest in products that let owners tap equity without giving up a low first-lien rate.

Where the burden is heaviest by state

Although rate lock-in is widespread nationally, its intensity differs from state to state. The report says every state has at least 74% of accessible equity classified as locked in, though New England and parts of the Southeast show somewhat lower shares.

• Lowest locked-in shares: Connecticut (74.6%), Massachusetts (76.7%) and Rhode Island (77.7%) had the smallest locked-in shares of eligible accessible equity, all well below the 88% national figure. Florida (82%) and Georgia (82.6%) also ranked among the 10 states with the lowest locked-in shares.
• Highest locked-in shares: South Dakota led the nation with 98% of eligible accessible equity locked in. Washington (93.3%), Wisconsin (92.4%), Colorado (92%), Minnesota (91.9%), California (91.7%), Hawaii (91.7%), North Carolina (91.7%), Montana (91.7%) and Kansas (91.4%) completed the top 10.

These regional differences could shape strategies for housing professionals, including reverse mortgage lenders. In states with lower lock-in shares, homeowners may be more willing to list and move or pursue cash-out refinances, while higher-lock-in states may lean more heavily on home equity lines of credit, closed-end seconds or renovation loans that leave the first lien untouched.

A possible opening for reverse mortgages

The home equity data and rate lock-in findings come as traditional reverse mortgage originators are seeing historically weak business. According to the National Reverse Mortgage Lenders Association (NRMLA), endorsements of federally insured Home Equity Conversion Mortgages (HECMs) totaled 24,182 in fiscal year 2026, the lowest level since 2003, when 18,097 HECMs were endorsed.

Proprietary reverse mortgages, which are not insured by the Federal Housing Administration (FHA), have helped fill some of that gap. New View Advisors recently estimated that private-label reverse mortgage volume reached $3.5 billion in the first three quarters of 2026, up 46% from the same period a year earlier. By contrast, HECM volume fell to $2.7 billion in the first nine months of the year, with proprietary loans accounting for 60% of the market in September.

Industry professionals have pointed to upfront mortgage insurance premiums as a major reason for fewer HECM originations. In a recent interview with HousingWire’s Reverse Mortgage Daily (RMD), Christine Jensen of Fairway Home Mortgage said the FHA could bring back the HECM “Super Saver” program. That option, which ended in 2013, carried an upfront premium of 0.5% of the home’s value, far below the current 2% requirement.

“If we could reduce the upfront mortgage insurance cost to 25% of what it is currently, it would be far more attractive to far more borrowers and far more accessible to far more borrowers,” Jensen said. “We would open up the use of this and put more borrowers into the pool that are at a lower probability of having a claim later.”

Home equity held by seniors age 62 and older reached a record $15.34 trillion in Q2 2026, according to a quarterly index from NRMLA and RiskSpan. While HECMs are limited to borrowers 62 and older, proprietary reverse mortgages are often available to borrowers as young as 55.

The changing product mix is also drawing in new entrants that are trying to educate forward loan officers. Adam Ennabe of California-based Access Home Lending recently told RMD that his company is in “very aggressive growth mode,” while still taking a measured approach to bringing on new wholesale account executives.

“We’re not building the company simply to originate more reverse mortgages. Our long-term mission is to help bring reverse mortgages into the mainstream mortgage industry,” Ennabe said.