Reverse Mortgages, Financial Inclusion, and Economic Development : Potential Benefit and Risks

This paper examines the state of reverse mortgage markets in selected countries around the world and considers the potential benefits and risks of these products from a financial inclusion and economic benefit standpoint. Despite potentially increa...

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Main Authors:	Knaack, Peter, Miller, Margaret, Stewart, Fiona
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2020
Subjects:	REVERSE MORTGAGE PENSION CONSUMER PROTECTION HOUSING FINANCE AGING FINANCIAL INCLUSION
Online Access:	http://documents.worldbank.org/curated/en/158231580411007157/Reverse-Mortgages-Financial-Inclusion-and-Economic-Development-Potential-Benefit-and-Risks http://hdl.handle.net/10986/33290

id	okr-10986-33290
recordtype	oai_dc
spelling	okr-10986-332902022-09-20T00:12:35Z Reverse Mortgages, Financial Inclusion, and Economic Development : Potential Benefit and Risks Knaack, Peter Miller, Margaret Stewart, Fiona REVERSE MORTGAGE PENSION CONSUMER PROTECTION HOUSING FINANCE AGING FINANCIAL INCLUSION This paper examines the state of reverse mortgage markets in selected countries around the world and considers the potential benefits and risks of these products from a financial inclusion and economic benefit standpoint. Despite potentially increasing demand from aging societies -- combined with limited pension income -- a series of market failures constrain supply and demand. The paper discusses a series of market failures on the supply side, such as adverse selection, moral hazard, and the costly regulation established to address these problems, leading to only a small number of providers, even in developed markets. Demand-side constraints are equally relevant, in particular high non-interest costs, abuse concerns, and the inability of reverse mortgages to cover key risks facing the elderly, particularly health and elder care. In developing countries, constraints are likely to be even higher than in advanced economies, due to high transaction costs and lack of consumer knowledge and protection. The enabling conditions for such markets to develop are outlined, along with examples of regulatory oversight. The paper concludes that these still seem to be largely products of last resort rather than well-considered purchases as part of good retirement planning. 2020-02-06T16:25:25Z 2020-02-06T16:25:25Z 2020-01 Working Paper http://documents.worldbank.org/curated/en/158231580411007157/Reverse-Mortgages-Financial-Inclusion-and-Economic-Development-Potential-Benefit-and-Risks http://hdl.handle.net/10986/33290 English Policy Research Working Paper;No. 9134 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	REVERSE MORTGAGE PENSION CONSUMER PROTECTION HOUSING FINANCE AGING FINANCIAL INCLUSION
spellingShingle	REVERSE MORTGAGE PENSION CONSUMER PROTECTION HOUSING FINANCE AGING FINANCIAL INCLUSION Knaack, Peter Miller, Margaret Stewart, Fiona Reverse Mortgages, Financial Inclusion, and Economic Development : Potential Benefit and Risks
relation	Policy Research Working Paper;No. 9134
description	This paper examines the state of reverse mortgage markets in selected countries around the world and considers the potential benefits and risks of these products from a financial inclusion and economic benefit standpoint. Despite potentially increasing demand from aging societies -- combined with limited pension income -- a series of market failures constrain supply and demand. The paper discusses a series of market failures on the supply side, such as adverse selection, moral hazard, and the costly regulation established to address these problems, leading to only a small number of providers, even in developed markets. Demand-side constraints are equally relevant, in particular high non-interest costs, abuse concerns, and the inability of reverse mortgages to cover key risks facing the elderly, particularly health and elder care. In developing countries, constraints are likely to be even higher than in advanced economies, due to high transaction costs and lack of consumer knowledge and protection. The enabling conditions for such markets to develop are outlined, along with examples of regulatory oversight. The paper concludes that these still seem to be largely products of last resort rather than well-considered purchases as part of good retirement planning.
format	Working Paper
author	Knaack, Peter Miller, Margaret Stewart, Fiona
author_facet	Knaack, Peter Miller, Margaret Stewart, Fiona
author_sort	Knaack, Peter
title	Reverse Mortgages, Financial Inclusion, and Economic Development : Potential Benefit and Risks
title_short	Reverse Mortgages, Financial Inclusion, and Economic Development : Potential Benefit and Risks
title_full	Reverse Mortgages, Financial Inclusion, and Economic Development : Potential Benefit and Risks
title_fullStr	Reverse Mortgages, Financial Inclusion, and Economic Development : Potential Benefit and Risks
title_full_unstemmed	Reverse Mortgages, Financial Inclusion, and Economic Development : Potential Benefit and Risks
title_sort	reverse mortgages, financial inclusion, and economic development : potential benefit and risks
publisher	World Bank, Washington, DC
publishDate	2020
url	http://documents.worldbank.org/curated/en/158231580411007157/Reverse-Mortgages-Financial-Inclusion-and-Economic-Development-Potential-Benefit-and-Risks http://hdl.handle.net/10986/33290
_version_	1764478406108381184

Reverse Mortgages, Financial Inclusion, and Economic Development : Potential Benefit and Risks

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