Reverse mortgage programme for financial security? : investigating senior citizens' willingness to participate in Hong Kong’s reverse mortgage programme

Abstract

Hong Kong’s reverse mortgage programme enables senior citizens aged 55 and above to use their Hong Kong residential properties as collateral to get reverse mortgage loans. A reverse mortgage loan provides the borrower with monthly payments over a specified period of time or throughout the entire life, or a lump-sum payout for particular purposes. It aims to provide older people in an ageing society with a means to create lifelong payouts, thereby enhancing the quality of their retirement lives. Although the reverse mortgage market has enormous potential, the participation rate of the reverse mortgage programme is low. Therefore, this dissertation investigates how potential borrowers in Hong Kong currently perceive reverse mortgages from a psychological perspective and identifies rationales that influence potential borrowers’ (un)willingness to participate in the programme. Understanding the determinants helps regulators identify potential target markets and develop more effective strategies to approach potential borrowers in future promotion. The study also provides a snapshot of the acceptance of a reverse mortgage from potential borrowers during an economic recession caused by the COVID-19 pandemic.