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A Study on the Characteristics of Reverse Mortgage Contract and Its Influence Over Monthly Payment

Seon-Jong Yoo 1,  Lee Seokhee 1

1건국대학교

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ABSTRACT

The main variables that affect when calculating Reverse mortgage’s monthly payment based on actuarial model are big changes in the economic environment. Inflation on Housing price, expectation on interest rates and demographic factors that influence on life expectancy. A paradigm shift in retiring financial services markets is to be expected. A new standard of reverse mortgage’s monthly payment will be reflect by stable housing prices, rise in average life expectancy. The purpose of this study recognize the changing demographic characteristics of reverse mortgage subscriber and examines any impact on the way they are calculated to determine the monthly payments. As a result, the independent variables that affect monthly payments are house prices, building area, address, total guarantee fees, the sum of loan, payment methods, payment type, age, and household make-up. That shows a total of nine variables significant at the significance level of less than 1%. Among them, payment type variable shows that affects the most on contract characteristic parameter of pensioners which is research focus of this paper sum of mortgage amount comes as second influencing variable in estimation of monthly payment of reverse mortgage. These results, when viewed in light of the analysis from the perspective of reverse mortgage provider, presents implications for the policy-making authority.

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* References for papers published after 2023 are currently being built.

This paper was written with support from the National Research Foundation of Korea.
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