On Taiwanese Reverse Mortgages: Current Development and Predicament, Product Design, Product Pricing, Improvement Methods and Related Suggestions(1/2)

Project Details

Description

Taiwanese population has entered into a trend with more aging old men and fewer children. In order to reduce the financial burden of government for taking care of the elder men and to activate the huge money of banks’ deposit and insurance companies’ premiums, the reverse mortgages have been introduced into Taiwan in 2013. Based on data of Ministry of Health and Welfare, although the reverse mortgages have great potential business opportunities in Taiwan, the trading volume has not significantly increased since 2013. The main reason why the potential borrowers/lenders who don’t want to join the reverse mortgages is that the contract design is not in line with the needs of them. The purpose of this study is to study how to increase the trading motivations of both lenders/borrowers by adding three provisions into the reverse mortgages: "no recourse", "postponing the interest payment to the end of the contract", "lifetime contract"; by adding a "national credit guarantee mechanism" into the trading system. This study intends to provide a rigorously pricing model for the new Taiwanese reverse mortgages by using appropriate interest rate models, the mortality model and the housing price model. The parameter calibration is also examined in the study.
StatusFinished
Effective start/end date1/08/1931/07/20

UN Sustainable Development Goals

In 2015, UN member states agreed to 17 global Sustainable Development Goals (SDGs) to end poverty, protect the planet and ensure prosperity for all. This project contributes towards the following SDG(s):

  • SDG 1 - No Poverty
  • SDG 16 - Peace, Justice and Strong Institutions
  • SDG 17 - Partnerships for the Goals

Keywords

  • the design and pricing of Taiwanese reverse mortgages
  • interest rate models
  • social welfare

Fingerprint

Explore the research topics touched on by this project. These labels are generated based on the underlying awards/grants. Together they form a unique fingerprint.