Spatial Variation in Reverse Mortgages Usage: House Price Dynamics and Consumer Selection

Haurin, Donald R.; Ma, Chao; Moulton, Stephanie; Schmeiser, Maximilian D.; Seligman, Jason S.; Shi, Wei

doi:10.1007/s11146-014-9463-2

Cited by 41 publications

(17 citation statements)

References 9 publications

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“…Shan () empirically investigates the characteristics of reverse mortgage borrowers, while Haurin et al. () empirically study the influence of house price dynamics on RML demand. Redfoot, Scholen, and Brown () shed light on how to better design RMLs by interviewing reverse mortgage borrowers and those who considered reverse mortgages but eventually decided not to use them.…”

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confidence: 99%

Reverse Mortgage Loans: A Quantitative Analysis

Nakajima¹,

Telyukova

2017

The Journal of Finance

102

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Reverse mortgage loans (RMLs) allow older homeowners to borrow against housing wealth without moving. Despite rapid growth in this market, only 1.9% of eligible homeowners had RMLs in 2013. In this paper, we analyze reverse mortgages in a calibrated life-cycle model of retirement. The average welfare gain from RMLs is $252 per homeowner, and $1,770 per RML borrower. Bequest motives, uncertainty about health and expenses, and loan costs account for low demand. According to the model, the Great Recession's impact differs across age, income, and wealth distributions, with a threefold increase in RML demand for lowest income and oldest households.

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mentioning

confidence: 99%

Reverse Mortgage Loans: A Quantitative Analysis

Nakajima¹,

Telyukova

2017

The Journal of Finance

102

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“…Of course, land values exceeding liabilities can be inherited or handed over in the FP scheme whereas liabilities exceeding land values will not be claimed against the subscriber's farmland under the general "non-recourse" principle. If the payoff values still exceed the minimum living (Haurin et al 2013;HUD 2013a). According to Bishop and Shan (2008), the average HECM user continues to become younger.…”

Section: The Background Of the "Farmland" Pensionmentioning

confidence: 99%

An exploratory analysis of payoffs for the lifetime mortgage of farming assets and its policy implications

Park¹,

Cho²

2014

AGR ECON-CZECH

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Th is study discusses and calibrates a pioneered model of estimating the payoff s for the farming-asset pension (FAP), which is to comprehensively integrate the components of farming assets into the recently implemented farmland pension (FP) in South Korea. Th e FP was introduced fi rst in the world so that farmland may be liquidated by the lifetime mortgage of farmland. However, it diff ers from conventional lifetime or reverse mortgages because its annuity program is implemented by the government according to the actuarial model whose variables are adjustable from the viewpoint of the elderly welfare. By introducing a simple standard of comprehensive farming assets into the FP model, the FAP model augments this social security measure, the step-by-step improvement of which is also expected to formulate the future policy implications of regional economic revitalisation as well as the elderly welfare for other countries.

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“…A number of studies have analysed household demand. Shan (2011) finds that the expansion of the US reverse mortgage market can partly be attributed to house price appreciation over time while Haurin et al (2016) show how house price growth and volatility explains spatial variations in take-up rates. However, French et al (2018) found that UK demand for equity release does not vary spatially.…”

Section: Introductionmentioning

confidence: 99%

Risk and Equity Release Mortgages in the UK

Sharma

French

McKillop

2020

J Real Estate Finan Econ

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Accessing elderly housing wealth through equity release mortgages (ERMs) continue to be the focus of policy debates about how to pay for social care and how to support retirement incomes in the UK. We demonstrate in this paper that the spatial concentration of this market in just a few regions is not due to demand but to the risks faced by suppliers. We show that by ignoring regional variations in No Negative Equity Guarantee risk in national pricing models providers cannot profitably supply these products outside areas of high house price growth. We also show that EU Solvency II capital requirements provide a further disincentive to supply ERMs in these areas. Government subsidies to product provision are also modelled and shown to be infeasibly high. We therefore conclude that the government policy focus on equity release as a means of tackling the challenges of an ageing population is misplaced.

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Spatial Variation in Reverse Mortgages Usage: House Price Dynamics and Consumer Selection

Cited by 41 publications

References 9 publications

Reverse Mortgage Loans: A Quantitative Analysis

Reverse Mortgage Loans: A Quantitative Analysis

An exploratory analysis of payoffs for the lifetime mortgage of farming assets and its policy implications

Risk and Equity Release Mortgages in the UK

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