TY - JOUR
T1 - Who wants to have their home and eat it too?
T2 - Interest in reverse mortgages in the Netherlands
AU - Dillingh, Rik
AU - Prast, Henriette
AU - Rossi, Mariacristina
AU - Brancati, Cesira Urzi
PY - 2017/12
Y1 - 2017/12
N2 - We carry out an empirical analysis to assess the level of interest in reverse mortgages in the Netherlands. Our results indicate that among Dutch homeowners there is substantial potential interest in reverse mortgages, especially for the purpose of being able to live more comfortably and not worry about money until death, or to make a significant expenditure on home improvements or traveling. Of the respondents who are interested in taking out a reverse mortgage loan, most indicate they prefer a line of credit (42%), while fewer prefer an annuity (15%) or a lump sum (10%). Our regression results, based on rich survey data, indicate that interest is higher among the self-employed and those who expect pension cuts, have wishes for big expenditures, have a high housing wealth relative to their income or already have more than one mortgage. Women and those with (grand)children, a lower socioeconomic status, sufficient savings and/or a deteriorating health are less interested. We find that giving examples of using a reverse mortgage for the benefit of the homeowners' (grand) children significantly raises interest in reverse mortgages among people who wish to leave a bequest. We interpret this as evidence that people are unaware of the potential of reverse mortgages to optimize the timing of wealth transfers.
AB - We carry out an empirical analysis to assess the level of interest in reverse mortgages in the Netherlands. Our results indicate that among Dutch homeowners there is substantial potential interest in reverse mortgages, especially for the purpose of being able to live more comfortably and not worry about money until death, or to make a significant expenditure on home improvements or traveling. Of the respondents who are interested in taking out a reverse mortgage loan, most indicate they prefer a line of credit (42%), while fewer prefer an annuity (15%) or a lump sum (10%). Our regression results, based on rich survey data, indicate that interest is higher among the self-employed and those who expect pension cuts, have wishes for big expenditures, have a high housing wealth relative to their income or already have more than one mortgage. Women and those with (grand)children, a lower socioeconomic status, sufficient savings and/or a deteriorating health are less interested. We find that giving examples of using a reverse mortgage for the benefit of the homeowners' (grand) children significantly raises interest in reverse mortgages among people who wish to leave a bequest. We interpret this as evidence that people are unaware of the potential of reverse mortgages to optimize the timing of wealth transfers.
KW - Reverse mortgage
KW - Financial product
KW - Bequest
KW - Retirement planning
KW - Life cycle
U2 - 10.1016/j.jhe.2017.09.002
DO - 10.1016/j.jhe.2017.09.002
M3 - Article
VL - 38
SP - 25
EP - 37
JO - Journal of Housing Economics
JF - Journal of Housing Economics
SN - 1051-1377
ER -