HomEquity Bank enjoyed record originations of reverse mortgages of $43 million in the fourth quarter of 2009.

This represents an increase of 77% over the same period last year and an increase of 11% over the previous record set in the second quarter of 2008, parent company HOMEQ Corp. said Wednesday.

As at December 31, 2009 the reverse mortgage portfolio of $865 million was $52 million or 6% higher than a year earlier..

This record breaking performance follows the October 2009 announcement that HomEquity Bank had received its federal bank charter, and its November 2009 announcement of major reductions in reverse mortgage interest rates.

“Our ability to access cost-effective and reliable sources of funding as a bank has allowed us to lower our cost of borrowing and pass the savings to our customers. The increase in originations during the last quarter is an early indication that our pricing strategy is working and that our reverse mortgage offering is being transformed from a niche product into a mainstream financial solution,” said Steven Ranson, president and CEO.

HomEquity Bank has been the main underwriter of reverse mortgages in Canada for more than 20 years. Reverse mortgages are offered to Canadian homeowners 60 and older and have no income, credit or health qualifications. Unlike traditional loans, borrowers don’t have to service the interest or repay the principal for as long as they own their home and are living in it.

In addition its direct-to-consumer distribution model, HomEquity Bank partners with major Canadian banks, credit unions, mortgage brokers, investment and financial planning firms to offer its reverse mortgage solution.

HOMEQ Corp. expects to release its 2009 fourth quarter financial results after the close of business on March 4.