Explaining why, right or wrong, (Italian) households do not like reverse mortgages

We investigate the determinants of interest in reverse mortgages (RM) for a sample of Italian homeowners and find that the majority of individuals belonging to categories identified, on the basis of economic analysis, as the main potential beneficiaries (i.e., women, elderly and ‘house rich–cash poo...

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Bibliographic Details
Published in:Journal of pension economics & finance 2016-04, Vol.15 (2), p.180-202
Main Authors: FORNERO, ELSA, ROSSI, MARIACRISTINA, URZÍ BRANCATI, MARIA CESIRA
Format: Article
Language:English
Subjects:
Aging
Annuities
Beneficiaries
Econometrics
Economic models
Economic statistics
Economic theory
Equity
Homeowners
Households
Housing
Housing prices
Interest
Interest rates
Mortgage insurance
Older people
Pensions
Reverse mortgages
Standard of living
Studies
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Summary:We investigate the determinants of interest in reverse mortgages (RM) for a sample of Italian homeowners and find that the majority of individuals belonging to categories identified, on the basis of economic analysis, as the main potential beneficiaries (i.e., women, elderly and ‘house rich–cash poor’ individuals) are, in fact, less likely to express an interest. When allowing for individual characteristics, we find that most results remain robust and notice that risk aversion and negative expectations on one's standard of living after retirement predict higher interest in the product. These results suggest that RM is perceived not so much as an ordinary instrument to achieve a better standard of living, but rather as a remedy against poor consumption.
ISSN:1474-7472
1475-3022
DOI:10.1017/S1474747215000013