Reverse mortgage market faces challenging second half of 2026

Industry professionals expect the reverse mortgage market to remain challenging throughout the second half of 2026 as elevated mortgage rates and affordability pressures continue to limit how much equity older homeowners can access. 

Shain Urwin, the national reverse mortgage director for C2 Financial and a board member of the National Reverse Mortgage Lenders Association (NRMLA), said the current lending environment is among the most difficult he has seen, despite record levels of home equity among many seniors.

“We’re probably in one of the most difficult lending environments I’ve ever seen,” Urwin said. “The average American is having a very hard time surviving, and that’s not making front-page news.”

Urwin is cautious about the final half of this year. “I would say the second half of 2026 will probably be more difficult to access equity, and I would think that 2026 would probably go down as one of the toughest lending years we’ve ever seen.”

While demand has stabilized compared to last year, reverse professionals don’t expect borrowing conditions to improve anytime soon. Instead, the Home Equity Conversion Mortgage (HECM) market is expected to simply remain “steady.” 

“I think we’re going to remain level,” said Kristy Osborn, a mortgage equity planner at Fairway Independent Mortgage Corp. “Relative to 2024, we’re starting to see borrowers come back around. We did have a lag last year simply due to the rate, and that impacts our older homeowners because that’s part of the consideration of how much equity they can actually tap into.”

The industry’s outlook reflects a market that has stabilized but remains constrained. According to recent data from Reverse Market Insight, the top 100 Home Equity Conversion Mortgage (HECM) retail lenders originated 2,064 loans in June, up 6% from May but down over 8% from June 2025’s count of 2,244 loans. Earlier this year, analysts attributed softer HECM volume in part to growing competition from proprietary reverse mortgage products.

Rose Krieger, a senior home loan specialist with Churchill Mortgage, said demand often exceeds eligibility.

“I do see where some lenders are not as optimistic about it, for the reason that you have to have quite a bit of equity in your home to do a reverse mortgage,” she said. “You want to have at the very least 60% or more, if possible, equity in your home for a reverse to be worth it, because they’re very conservative loans.”

Today’s borrower profile

While limited equity keeps some homeowners from qualifying, professionals say today’s reverse mortgage borrowers generally fall into two groups: retirees seeking immediate financial relief and wealthier homeowners using home equity as part of a broader retirement strategy.

“I see borrowers across the entire spectrum,” Osborn said. “Some come to me because there’s a need and maybe they need some immediate cash-flow relief, but I talk with others who are financially comfortable and they’re looking at incorporating that home equity into their overall retirement strategy.”

Urwin said inflation and rising living costs have changed many conversations with borrowers.

“Many people’s retirement plan is, ‘I hope I die before then,’ and that’s really not a great retirement plan…they’re not able to survive on the rising cost of inflation,” he said.

Economic concerns are infiltrating the conversations that Urwin is having with clients, especially since today’s borrowers are living longer.

“There are 77 million baby boomers…this generation is having a really hard time right now. Many of them are living on Social Security alone. Maybe have a small pension. Those that thought they could retire are considering going back to work.”

The possibilities of running out of retirement money, returning to work, and a borrower’s long-term needs are increasingly being factored into today’s conversations, Osborn said.

“A big conversation that we’re seeing is how are we funding long-term care needs? That home equity can play a role in that, and it’s not just a financial distress product; it’s also about using that housing wealth intentionally so that we have greater flexibility in retirement,” she said. “They all come with different nuances…in some instances the HECM is going to be what fits what that older adult needs, and in some instances that proprietary product is going to be better. At the end of the day, it’s their decision.”

Other borrowers are looking for long-term guidance when weighing their options, Krieger said. “Sometimes we speak with borrowers, and they just don’t have the equity in their home yet. A lot of what we do is helping them create a plan to get to where they need to be to do a reverse mortgage.”

A shift in acceptance

As borrower interest evolves, professionals also say attitudes among financial planners and other advisers continue to shift.

“They’re opening their eyes to how this product can really fit into that overall retirement picture,” Osborn said. “It’s not just a financial distress product. It’s also about using that housing wealth intentionally so that [they] have greater flexibility in retirement.”

Urwin agrees. “We’re seeing more affluent buyers with very little mortgages or no mortgages opening up HECM lines, and then we’re seeing a lot of proprietary loans,” he said. “Financial advisors, CPAs, attorneys are saying, ‘This is a great tool so you don’t have to spend down your investments.'”

Still, misconceptions about the product have continued throughout 2026.

“I think there’s more information out there today, but I don’t think it’s helping,” Osborn said. “The biggest misconception that surprises me when I talk with consumers is the fact that they really think the bank is going to own their home.”

Krieger added, “These programs have been restructured, but from what I’ve heard, they weren’t very friendly to the borrower. Now there are a lot of checks and balances, and these are government loans, so they do their due diligence on their side and require counseling for the borrowers themselves.” 

Eyes on the future

Heading into the final months of 2026, Urwin, Osborn and Krieger are each paying close attention to interest rates, home prices and potential policy changes.

Urwin said NRMLA continues to advocate for changes to the HECM program. He pointed to three main pressure points that NRMLA is eyeing to change: the 2% upfront mortgage insurance premium (MIP), the current 3% HECM floor rate, and second appraisal requirements that can derail deals. 

“To me, to see a change, it’s going to take those things in tandem,” he said.

Osborn said she is focused on mortgage-rate movements because timing can significantly affect how much equity borrowers are able to access.

“If I’m talking to someone now, reverse mortgage rates for the FHA product only change every week, and for the proprietary products they’ll go sometimes months and not change,” she said. “We want to keep our finger on the pulse of that to make sure that an interested borrower is triggering that loan at the right time.”