A Comparison between Fixed-Rate and Adjustable-Rate Reverse Mortgages

• Main Author: 李秉芳
• Other Authors: 林哲群
• Format: Others
• Language: zh-TW
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/57474984887022125475

碩士 === 國立清華大學 === 計量財務金融學系 === 98 === Due to an aging society in Taiwan, we should put more emphasis on the caring issues for the elders. The reverse mortgage program is one of the solutions which let the elders be able to convert their house equity to cash to afford their ordinary living expenses. In this study, we attempt to use the life expectancy from Taiwan 2008 life table as well as simulated house price and interest rate to compute the maximum loan to value (LTV) according to different gender and age groups in Taiwan. We also calculate the annuity amount with both fixed rate reverse mortgage and adjustable rate reverse mortgage. In addition, we attempt to use reverse mortgage insurance premium structure combined with simulation model to decide which type of reverse mortgage is adequate for Taiwan. This study is expected to provide the valuable information for executing reverse mortgage program in Taiwan. The results show that the older people can receive more monthly payment. In addition, the female above 90 years old can receive more monthly payment than male and vice versa. Furthermore, the total annual loan costs rate of adjustable rate reverse mortgage is lower than fixed rate reverse mortgage toward borrowers with the same gender and age except for the female at age of 95.