Reverse mortgages for retirement: a feasible solution in Belgium

Reverse mortgages for retirement: a feasible solution in Belgium How? – International analysis: the reverse mortgages over the world - Case study: the Belgian market (qualitative analysis) Background problem: The challenges of an ageing population for the pension system • States & private companies are not able to meet the nursing home demand • Increase life expectancy • Arrival of the baby boomers at the retirement • Seniors are asset rich and cash poor -->Increase of the Social Security cost --> system not viable anymore Reverse mortgage as a feasible solution in Belgium? Part I: international analysis (FR, UK and USA) 5 factors influence the reverse mortgages development - Awareness about the RMs Same factors which - Cash flow needs will influence the decision to - Low interest rates introduce the RMs in - Debt aversion Belgium? - Perception of home equity: the heritage notion Part II: Belgian study case Belgian market: high ownership rate, debt aversion, emotional attachment to the property, familial solidarity. Product characteristics: lump sum or monthly payment, fixed interest rate, minimum age at 65, no State insurance. Problem: Currently, the accrued interest rates are not allowed in Belgium necessity to change the law to introduce the RMs Recommendations There is a consensus from all the Belgian actors, RMs will be legalized soon. Reverse mortgage in Belgium will be an emergency solution to deal with the ageing challenge, it will not resolve the global issue. It will be only a niche product (max 20 000 contracts). - It should be considered as a loan and not as a consumption loan: house adaptation, health costs or to maintain life standard. - Necessity to develop a housing market index to evaluate properly the house pricing in long term - Information about revenue and cost forecasts will be mandatory in order to protect the consumers.Master [120] en Ingénieur de gestion, Université catholique de Louvain, 2016Master [120] en Ingénieur de gestion, Université catholique de Louvain, 201