From the user's perspective : how do we explain the low participation rate of the reverse mortgage programme (RMP)?

Abstract

Our society is facing the pressure of medical resources and social security which are emerged by the general longer life expectancy. The quality of elderly retirement life may be also affected by the same problem and inflation, they may not have enough financial resource to maintenance a respectable retirement life. Although the care of the elderly by their offspring is a well-established Chinese traditional culture, some offspring may not able to provide a good (financial) support to their elderly parents or some elderly without offspring, which make the problem being even more serious.

To solve the problem, the Government launched the Reverse Mortgage Programme (RMP) through The Hong Kong Mortgage Corporation Limited from 2011 to current. The primary purpose of RMP is to unlock the assets of the property for cash flow. Similar programmes were practiced in other countries and received public support. However, in Hong Kong, the programme did not have a desirable result since the launch, and the participation rate was only a very small portion of the eligible target customers. Through the questionnaire and in-depth interviews, the investigator would like to have a better understanding what problem(s) caused the elderly home owners reluctance to join RMP.

Through primary data collection and analysis, the investigator found that RMP is useful to some of the elderly home owners – those who tend to be self-reliant and did not need to worry about their children’s future. The programme can truly unlock the property value and offer them a quality retirement life.

Some internal problems of RMP such as poor economic return, a failed marketing strategy, unreliable bank image etc. which made RMP an unattractive financial product. When the product’s marketing mix is lower than the consumer expectation and the product cannot satisfy the end-user needs, it will only lead to a negative effect such as low participation rate. The external factors as cultural different between Eastern and Western society, the care of the elderly for the future of the offspring all affect the decision of elderly home owners. With the combination of the internal and external factors associated with RMP, it is not surprising that the elderly home owners prefer to leave property to their children instead of joining the RMP.