Title Road for reverse mortgage programme in Hong Kong : a studyof consumer's perception
Author(s) Lui, Sai-yan; 雷世昕
Citation
Issued Date 2014
URL http://hdl.handle.net/10722/207665
Road for Reverse Mortgage Programme in Hong Kong – A Study
of Consumer’s Perception
by
LUI SAI YAN
DISSERTATION
Submitted in partial fulfilment of the requirements for the degree of Master of Housing Management,
The University of Hong Kong July 2014
DECLARATION
I declare that this dissertation, entitled “Road for Reverse Mortgage Programme in
Hong Kong – A Study of Consumer’s Perception”, represents my own work,
except where due acknowledgement is made, and that it has not been previously
included in a thesis, dissertation or report submitted to this University or other
institutions for a degree, diploma or other qualification.
_______________
Table of Content
Chapter Content Page
Acknowledgement 4
Abstract 5
Chapter 1 Introduction
1.1 Introduction 7
1.2 Aim of the Study 9
1.3 Objectives of the Study 10
1.4 Significance of the Study 10
1.5 Scope of the Study 12
1.6 Organization of the Study 12
Chapter 2 Literature Review
2.1 Definition of Reverse Mortgage 15
2.2 Reverse Mortgage in U.S. 17
2.3 Evaluation of Reverse Mortgage in U.S. 21
2.4 Chinese Studies on Reverse Mortgage 25
2.5 Reverse Mortgage Programme in Hong Kong 27 2.6 Three Enhancements of Reverse Mortgage
Programme in Hong Kong
30
2.7 Mechanism of Reverse Mortgage Programme in Hong Kong 31 Chapter 3 Methodology 3.1 Introduction 38 3.2 Conceptual Framework 39 3.3 Survey Design 41 3.3.1 Data Collection 42 3.3.2 Questionnaire Design 43
Chapter 4 Data Analysis
4.1 Introduction 47
4.2 Consumer’s Awareness 48
4.2.2 Understanding 52
4.3 Consumer’ Motivation 55
4.4 Factors Affecting the Consumer’s Motivation 58
4.4.1 Programme Content 58
4.4.2 Legacy Concern 64
4.4.3 Psychological Factors 71
4.5 Relationship between Consumer’s Perception and Demographic Information
75
4.5.1 Gender 75
4.5.2 Age 77
4.5.3 Education Level 80
4.5.4. Value of Self-Occupied Property Owned 82 4.5.5 Value of Assets Owned (Excluding Value
of Self-Occupied Property Owned)
85
4.5.6 Household Member 88
4.6 Summary 92
4.6.1 High Awareness but Low Understanding 92
4.6.2 Low Consumer’s Motivation 93
4.6.3 Programme Content and Legacy Concern as Major Factors Influencing Consumer’s Motivation
93
4.6.4 Consumer’s Motivation by Age, Value of Assets Owned and Household Member
94
Chapter 5 Recommendation and Limitation
5.1 Introduction 96
5.2 Recommendation 97
5.2.1 Promote RMP by Different Means of Media
97
5.2.2 Focus on Elderly without Children 99
5.3 Limitation 101
Chapter 6 Conclusion 102
Chapter 7 References 105
Acknowledgement
I shall take this opportunity to express my gratitude and respect to Dr. Zhang Feng,
my dissertation supervisor for his kind guidance and continuous support. Without
his precious advice and professional supervision, the dissertation could not be
completed smoothly.
Also, it is important to say thank you to my family, friends, colleagues, and
especially to Ms. Esther Chan, my beloved fiancee for their support and patience
given to me. Their encouragement did contribute a lot to my work.
Last but not least, the primary data collected from the respondents is absolutely
the key of the study. Thank you so much for their valuable time spent for
Abstract
Reverse Mortgage Programme (“RMP”) was launched in Hong Kong on 11th July
2011. It aims to help the elderly to improve the living standard. Since the aging
population is getting serious and the lack of comprehensive retirement protection
scheme in Hong Kong, a big potential market for reverse mortgage is given which
is anticipated that the eligible elderly should eagerly participate to the programme.
However, the statistic from the Hong Kong Mortgage Corporation (“HKMC”)
showing that the participation rate of RMP is surprisingly low. Up to 31st May
2014, only 624 numbers of applications were recorded. In order to boost the
participation rate, this dissertation has conducted a study to identify the reason(s)
of low participation rate and explore the possible way(s) to enhance the RMP.
In order to achieve the aim of the study, a questionnaire survey was conducted to
investigate the consumer’s perception to RMP. It divided consumer’s perception
into consumer’s awareness and consumer’s motivation. High awareness but low
understanding to RMP was found according to the results of survey. Meanwhile,
content and legacy concern are the major factors influencing the consumer’s
motivation.
Nevertheless, there still a long way to go for the RMP in Hong Kong. To enhance
the performance of RMP, it is recommended to promote it by different means of
media and focus it to the elderly without children. Further studies would be
Chapter 1 – Introduction
1.1 Introduction
Aging population has long been the major problem in Hong Kong. Generally
speaking, the problem is mainly due to the low fertility rate and long life
expectancy. According to the data from Census and Statistics Department (2012),
the total fertility rate decreased from 1281 live births per 1000 women in 1991 to
1204 in 2011, which may be caused by marriage postponement and increased
prevalence of spinsterhood etc. Besides, as more and more people in Hong Kong
emphasize healthy life, the life expectancy is increasing in recent years. In 2011,
the expectation of life at birth was 80.5 for males and 86.7 for females. And under
estimation, the life expectancy was expected to increase by 3.9 years for males
and 4.1 years for females in 2041. Combining the above-mentioned situation, the
proportion of the population aged 65 and over is projected to rise tremendously
from 13% in 2011 to 30% in 2041, which is equal to around 2.5 million of people.
Hence, the retirement life of the elderly is the top agenda of the HKSAR
government. Although 27% of older persons had “self-occupied properties” as
refer to the data from Census and Statistics Department (2009), many of them are
regarded as “house-rich-cash-poor”, as the data also revealed that over 50% of the
older persons had assets less than $50,000 excluding the value of owner-occupied
properties. Probably the burden of repayment of property mortgage loan leads to
the low saving. To cope with, however, the lack of comprehensive retirement
protection scheme in Hong Kong being the major challenge for the politicians.
The Mandatory Provident Fund (“MPF”), being the main pension scheme, is
always criticized by the public for low contribution rate. Given these conditions, it
is believed that there should be a relatively big potential market for reverse
mortgage in Hong Kong.
The HKSAR government aware the situation and, after the pass of a motion in the
Legislative Council on “Policy on elderly housing”, the Reverse Mortgage
Programme (“RMP”) launched on 11th July 2011 which is regulated by The Hong
Kong Mortgage Corporation (“HKMC”). Given the expected big potential market,
the participation rate of the RMP is disappointing low. According to the statistic
which is less than 20 applications per month after calculation.
To address the problem of low participation rate of RMP, this dissertation would
conduct a research to study the consumer’s perception towards RMP. The findings
would be analyzed and some recommendations based on the findings would be
made.
1.2 Aim of the Study
The aim of the study is as follow:
(a) To explore the possible way(s) to enhance the Reverse Mortgage Programme
1.3 Objectives of the Study
The objectives of the study are as follow:
(a) To conduct literature review on the definition and mechanism of Reverse
Mortgage.
(b) To conduct literature review on the development of Reverse Mortgage in
Hong Kong and U.S.
(c) To find out the reason(s) of low participation rate of RMP in Hong Kong by
understanding the consumer’s perception.
(d) To make a recommendation to enhance RMP in Hong Kong.
1.4 Significance of the Study
Reverse mortgage has been discussed vigorously in Hong Kong before the
feasibility of the application of the idea.
Today the RMP was launched for over 3 years. Nevertheless, very few studies
were conducted to review the performance of RMP. Hence, it is significant to have
a study to review the performance of RMP and, through a research of consumer’s
perception, find out the major factor(s) influencing the performance of RMP.
Second, as only a few studies reviewing the performance of RMP, it is not difficult
to know that even fewer studies have been conducted to propose the possible
enhancement method(s) for RMP. Thus, this study is also very significant to, by
understanding the major factor(s) influencing the performance of RMP, make an
enhancement proposal to boost the participation rate of RMP.
Last but not least, the findings of the survey shall provide some insights for the
HKMC and other related planners. Therefore the study could facilitate the future
1.5 Scope of the Study
The study would focus on the consumer’s perception towards Reverse Mortgage Programme (“RMP”) in Hong Kong launched on 11th
July 2011. Understanding
that the Global and Hong Kong’s financial condition would affect the participation
rate of RMP as well, nevertheless, this aspect would not be covered in the study.
To achieve the aim and objectives of the study, a research would be conducted by
interviewing the targeted consumers. They are the eligible applicants who did not
apply RMP yet. Hence, the research would focus on interviewing homeowner in
Hong Kong who are aged 55 or above.
1.6 Organization of the Study
The flow of the study would as following. Chapter 1 is the foundation of the study.
Background information of the RMP is provided together with the aim, objectives,
significance and scope of the study. It draws a clear picture for the study so that
Chapter 2 is literature review containing the empirical background of the RMP in
Hong Kong and the Chinese studies on reverse mortgage. Also, being one of the
biggest markets, the reserve mortgage in U.S. and the relevant studies on reverse
mortgage in U.S. would be covered. Moreover, the literature review on the
definition of reverse mortgage and the mechanism of RMP in Hong Kong would
be provided.
Methodology is discussed in the Chapter 3 of the study. After a brief introduction
of the study, the conceptual framework of the study would be illustrated.
Afterwards, the methods of data collection and the questionnaire design would be
elaborated.
Being the Chapter 4 of the dissertation, data analysis would be the core part of the
study. The results of each part of the questionnaire including consumer ’s
awareness, consumer’s motivation, factors influencing the consumer’s motivation
and the demographic information of the respondents would be shown and
discussed. A comprehensive summary of the findings would be given in the last
According to the findings in the data analysis, recommendation and limitation of
the study would be discussed in Chapter 5. By generalizing the key points of the
study, a conclusion would be made in Chapter 6. And finally the references and
Chapter 2 – Literature Review
2.1 Definition of Reverse Mortgage
According to Michelangeli (2008), reverse mortgage is a type of home equity loan
allows homeowners to convert some of the equity in their home to cash. The
elderly homeowners could remain in their homes while using the equity in their
homes as a form of income (Foote, 2010).
Feng (2010) indicated that reverse mortgages allows those who are “house rich,
cash poor” to consume their housing asset without moving out. Actually those
seniors who are 60 or above could consider the product. Seniors borrow against
their housing assets and receive one lump sum or multiple payments. The loan
does not have to be repaid as long as the borrower lives in the house (Michelangeli,
2008). Generally, reverse mortgage are typically repaid with the proceeds from the
sale of the property securing the loan or the repayment made by family members
In Hong Kong, the Hong Kong Mortgage Corporation Limited (“HKMC”) also
provided similar definition for reverse mortgage:
Reverse mortgage is a loan arrangement. It enables borrowers to use their
self-occupied residential properties in Hong Kong as security to borrow from
a participating bank. The borrowers remain as the owners of the properties
and can continue to stay at the properties for the rest of their life.
Borrowers will receive monthly payouts over a payment term of either a fixed
period of 10, 15 or 20 years or their entire life, and they may also borrow
lump-sum loan(s) for specific purposes when needed.
In general, borrowers do not need to repay their reverse mortgage loan
during their lifetime, unless they move out from their property permanently
or the reverse mortgage loan is terminated due to other reasons.
When borrowers’ reverse mortgage terminates (or borrowers pass away),
they (or their inheritors) have the preferential right to redeem their property
under the reverse mortgage. If borrowers (or their inheritors) choose not to
exercise such a right, the bank will sell their property to recover the
outstanding loan amount they owe.
If the sale proceeds from the property exceed the outstanding loan amount
owed by borrowers, the bank will return the surplus to them (or their
inheritors) after paying off such outstanding loan amount in full. However, if
there is any shortfall, borrowers (or their inheritors) need not worry as the
shortfall will be borne by the HKMC under an insurance arrangement
between the bank and the HKMC.
2.2 Reverse Mortgage in U.S.
The United States is a key market model to study in the reverse mortgage field. It
involves parties from all walks, and offers a variety of product options targeting
seniors of all levels (Feng, 2009). As such, it is absolutely beneficial to review the
previous studies conducted on reverse mortgage in U.S. Chan (2002) completed a
comprehensive study regarding The HECM Programme, The HomeKeeper
The HECM Programme
The federally insured reverse mortgages under the HECM programme are
available throughout the United States to homeowners aged 62 or over, regardless
of income. The HECM insurance programme is backed by the Federal Housing
Administration (FHA) of the U.S. Department of Housing and Urban
Development (HUD). HUD is responsible for the design and modification of the
insurance programme whereas FHA is responsible for the lenders’ approval,
collects mortgage insurance premiums and manages the insurance fund.
As of today, The HECM programme generates the largest number of reverse
mortgage loans in the U.S. market. The programme started in 1990, which U.S.
Congress authorized the HECM trial programme to insure up to 2,500 reverse
mortgages. In 1991, Congress extended the trial programme till 1995 and
expanded the limit to insure up to 25,000 reverse mortgage loans. Later in October
1998, Congress made the programme permanent and increased the number of
allowable outstanding loans to 150,000. Actually in October 1999, more than
38,000 elderly homeowners have chosen HECM loans to help them with their
financial needs. It was recorded that around 9,000 out of 38,000 loans have
insurance fund. The programme is developing gradually and steadily.
Indeed, the reverse mortgage loans are not come from HUD or FHA directly.
Instead, HECM loans are issued by banks, mortgage companies or other private
lenders. However, these companies sell virtually all HECM loans to Fannie Mae
subsequently, which is a government-sponsored entity that operates under the
general oversight of the federal government.
The HomeKeeper Programme
Fannie Mae introduced its own reverse mortgage product, the HomeKeeper
starting from 1995. The loan options available under the HomeKeeper programme
are similar to those of the HECMs with fewer payment options. Borrowers can
only choose monthly cash advances, or a line of credit or a combination of both,
however, could not choose lump sums or term payments. Similar to most HECM
reverse mortgages, HomeKeepers are monthly floating interest rate loans.
Due to the unrestricted limits of the size of loans, the major advantage of Fannie Mae’s programme is that owners with high-value homes may be able to borrow more than from the HECM programme, which the limit is restricted by FHA.
Fannie Mae also has a shared appreciation option that borrowers are allowed to
gradually increase the loan amount along with their appreciating home values.
In comparison, HECM loans often provide more funds for qualified borrowers as
they use more favourable assumption for borrowers and so are preferred by
owners who are eligible for both programmes. Indeed, only borrowers with
high-value properties would prefer to choose the HomeKeeper programme. As
such, the number of HomeKeeper loans originated has been much smaller than the
number of HECMs. To compare, there were less than 1,000 HomeKeeper loans
issued whereas around 8,000 newly originated loans under the HECM programme
in 1999.
Private Sector Products
In the early 1990, there have totally three private sector reverse mortgage products
available from TransAmerica HomeFirst, Financial Freedom Senior Funding
Corporation, and Household Senior Services. However, Household Senior
Services discontinued its programme in 1997. Unfortunately, TransAmerica also
discontinued its programme and sold its entire loan portfolio to Financial
reverse mortgage product other than the HECM and HomeKeeper programmes
today.
2.3 Evaluation of Reverse Mortgage in U.S.
While the population of older homeowners eligible for reverse mortgages is
poised to grow significantly in the coming years, the number of eligible
homeowners that will actually choose to take out a reverse mortgage is much more
uncertain. Older homeowners today are largely uninterested in reverse mortgages,
and market penetration is very low. Only about 2 to 3 percent of eligible
homeowners today have a reverse mortgage (Galloway & Kantor, 2013). Several
surveys were conducted in U.S. to assess the perception of consumers towards
reverse mortgage.
AARP survey in 2007
In December 2006, AARP began to conduct the first national survey of reverse
mortgages borrowers and homeowners who had considered these loans but
decided against them. The study found that the consumer impressions of and
research indicates that awareness of the existence if reverse mortgages is
increasing, though interest in taking out a loan in the future has decreased. Most
consumers admit that they do not know much about these loans. And
misunderstandings about reverse mortgages are still common. Data from research
indicate that many consumers are still wary about of such loans.
Harris Interactive survey in 2007
The survey aimed to assess the consumer’s awareness and favorability of different
mortgage products of a Harris Poll of 2,383 U.S. adults conducted online between
May 8 and 14, 2007 by Harris Interactive.
Consumer’s awareness of reverse mortgage is relatively low among the mortgage products. The 64% awareness of reverse mortgage ranked sixth out of ten
mortgage products. For the favorability, reverse mortgages also recorded a
disappointing result among other mortgage products. The category of net total
Survey conducted by Leviton in 2001
This study explored response of homeowners who had received reverse mortgage
counseling through open-ended interviews. Decision-making was influenced by
attachment to home, family input, and financial attitudes, including desire to leave
a legacy. In general, homeowners took reverse mortgages only as a “last resort”
that enabled them to maintain their independence.
The financial legacy was a strongly-held value. Many elderly homeowners regard
this as a responsibility, even for people without children who wanted to leave
something for nieces and nephews. They wanted to hold on to them even though
they did not expect heirs to live there, which reverse mortgages inevitably conflict
with the desire to leave a legacy.
In this study, the author also quoted some other authors, who have suggested that
leaving a legacy may satisfy a very basic need for a “sense of immortality,” a
feeling that somehow we will live on in the memories of people we care for
(Dobrof&Moody, 1996). In short, the legacy motive will continue to dampen
Survey conducted by Stephanie and George in 2009
They surveyed 324 homeowners over the age of 62 living in 30 states to obtain
information about their attitudes toward and awareness of HUD's HECM program.
The majority of the respondents are either unaware of the program, uninterested in
the program, or both. Most of the respondents expressed having limited
knowledge of the program and no knowledge of the program at all. Only a few
respondents were either well informed due to the involvement of family and
friends, and, the remaining was misinformed about the program's attributes.
For the attitudes aspect, many respondents expressed little personal interest but
believe it was an attractive program for those who needed it. In addition, the
respondents expressed that the term payments would be more attractive than
tenure payments. It could be deduced that the respondents may be confused or
skeptical about the program features that were unique or unusual. That may relate
to the seniors’ fear of being victimized by complex financial transaction (Peterson,
2.4 Chinese Studies on Reverse Mortgage
As mentioned before, only few studies on reverse mortgage were found in Hong
Kong and even China since reverse mortgage is not popular in Chinese society.
Nonetheless, these studies could undoubtedly give us some insights especially for
the influence of legacy concern to reverse mortgage in Chinese society.
Study by Sau Po Centre on Ageing in 2010
Just before the implementation of RMP in Hong Kong, the Sau Po Centre on
Ageing of The University on Hong Kong conducted a study regarding the reverse
mortgage in 2010. The study aims to assess the receptivity amongst older persons
(aged 60 or above) towards the reverse mortgage and examine the factors affecting
the older person’s consideration of taking up the reverse mortgage.
The study found that around 20% of the respondents showed interest in reverse
mortgage but over 50% of respondents did not show any interest in reverse
mortgage. The study discovered that leaving the property to their families was the
Study by Jun Feng in 2010
In the same year, Jun Feng from The University of New South Wales conducted a
study to investigate the Chinese reverse mortgage market. Feng discovered that
the major obstacle for introducing reverse mortgage in China is the Chinese
culture. The close family ties lead to a strong bequest motives to the elderly in
China. However, he believed that the culture is changing gradually which may
lead to a increasing demand on reverse mortgage in China.
Study by Wai-Sum Chan in 2002
Almost 10 years before the implementation of the RMP in Hong Kong, Chan
conducted a study on the development of reverse mortgage of several overseas
countries and recommended strategies to overcome the possible obstacles for
introducing reverse mortgage in Hong Kong. Chan stated that most Chinese old
people wish to leave their houses to their children being one of the major obstacles
of introducing reverse mortgage in Hong Kong. To cope with, the government
may cooperate with the potential lenders for implementing some campaigns
2.5 Reverse Mortgage Programme in Hong Kong
In July 2011, the HKSAR Government introduced Reverse Mortgage Programme
(“RMP”), which is regulated by The Hong Kong Mortgage Corporation Limited
(“HKMC”) established in March 1997, is wholly owned by the Hong Kong
Special Administrative Region (HKSAR) Government through the Exchange
Fund.
Background
According to the meeting notes of Legislative Council (2011), the idea of
launching a "reverse mortgage" scheme in Hong Kong was raised by Members of
Legislative Council (“Members”) since early 2000s. It was discussed in
connection with issues relating to the care for the elderly without actively pursued
by the Administration before 2010. On one hand, the Administration indicated that
Hong Kong shall have a demand for reverse mortgage due to the aging population.
On the other hand, the Administration believed it should be hard to supply a
reverse mortgage product which would be welcomed by the elderly. As combining
the expected low property value of the old buildings owned by the elderly and the
payment for the elderly homeowner should not be high and attractive enough.
Studies in 2000s
According to the report of HKMC (2010), several studies regarding reverse
mortgage were conducted in 2000s. Chou and his colleagues (Chou, Chow, & Chi,
2006) conducted secondary data analysis on data provided by the Census and
Statistics Department that was based on a representative random sample of middle ‐aged adults (aged between 45 and 59) in 2001 in Hong Kong. The findings showed that about 11% of the respondents definitely or probably would consider
applying for the reverse mortgage once it is available in Hong Kong. It was also
found that childlessness and possession of stocks, bonds or funds were positively
related to the willingness to consider applying for the plan while the amount of
financial asset (excluding their self‐occupied properties) was negatively associated
with that willingness.
In 2005, the first ever empirically based study was conducted by Chui and his
colleagues. The research surveyed 1,001 respondents from two age groups: elderly people (aged 60+) and the “soon‐to‐be‐old” (aged 45‐59) homeowners of private residential housing. A potential market of reverse mortgage was found amongst
the homeowners who would like to remain in their original residence; who are not
in immediate need of a large lump sum of cash and who have middle to upper
ranks of property (i.e. those above HK$3 million). According to the study, around
10% of respondents revealed interest to reverse mortgage given the circumstance
that the payment is calculated based on 30% of property value.
Discussions in 2010 and 2011
At the meeting of the Panel on Financial Affairs on 1 March 2010 (Legislative
Council, 2010), HKMC was asked whether they would consider providing reverse
mortgage services and details of the relevant work plan. The Hong Kong
Monetary Authority replied that HKMC was considering conducting a feasibility
study of a reverse mortgage product and the demand in Hong Kong. HKMC
would draw on international experience as well as the local conditions to examine
whether Hong Kong should and could introduce reverse mortgage.
At the Council meeting on 30 June 2010, the Council passed a motion on "Policy
on elderly housing", urging the Government to formulate a targeted,
comprehensive and long-term planning policy on elderly housing to meet the
believed that the HKSAR Government should encourage the banking and
insurance sectors to work on more financial products such as reverse mortgage in
order to help the elderly to improve the living standard.
On 16 December 2010, HKMC announced that its Board had approved the
corporation to launch a pilot scheme on reverse mortgage in 2011. The pilot
scheme would enable the elderly homeowners to receive annuity payment by
mortgage their self-occupied and non-mortgaged residential properties to the bank
while they can still staying at the said properties. Finally on 11th July 2011,
HKMC announced that the RMP was launched.
2.6 Three Enhancements of Reverse Mortgage Programme in Hong Kong
The HKMC announced in November 2012 that three enhancements to the RMP
will come into effect on 16 November 2012, bringing greater flexibility and
benefits to both existing and prospective reverse mortgage borrowers. These
(1) increasing the maximum specified property value for payout calculation from
HK$8 million to HK$15 million.
(2) lowering the minimum age of borrowers from 60 to 55.
(3) increasing the maximum lump-sum payout amount from 50% of the actuarial
value of the reverse mortgage to 90%.
However, the number of application did not record a tremendous increase after the
implementation of the 3 enhancements. Up to 31st May 2014, the total number of
application is just 624. The effectiveness of the three enhancements is very low.
2.7 Mechanism of Reverse Mortgage Programme in Hong Kong
Anyone who would like to apply the RMP in Hong Kong should observe the terms
Eligibility
For those who are interested in applying RMP, he/she must hold a valid Hong
Kong Identity Card and aged 55 or above; and must not be an undischarged
bankrupt or otherwise subject to bankruptcy petition or individual voluntary
arrangement.
Their properties must be held in the borrowers’ own name. If it is jointly held with
another person as joint tenant, the joint tenant must become a co-borrower under
the same reverse mortgage and is able to satisfy the relevant eligibility criteria as
well. Also, the property must not exceed 50 years of age and must not be subject
to any resale restriction. For the property exceeding 50 years of age, it will be
considered only on a case-by-case basis. Last but not least, the property must not
be rented out, which must be occupied by the borrower as his/her principal
residence in Hong Kong.
Loan Cost
Interest expense
Reverse mortgage is a loan arrangement in which interest would be charged by the
compound basis. Interest will be debited to the outstanding loan amount and the
interest rate would be Hong Kong Prime Rate minus 2.5%.
Mortgage insurance premium
There are totally 2 mortgage insurance premiums required and the amount payable
by the borrower will be debited to the outstanding loan amount. The first one is
Upfront Mortgage Insurance Premium. It is payable in 7 annual installments
starting from the 4th anniversary. Each annual installment is calculated at 0.28% of
the property value. The second is Monthly Mortgage Insurance Premium. It is
payable on a monthly basis at the annual rate of 1.25% of the outstanding loan
amount.
Counselling fee
The borrower needs to pay a counselling fee to his/her Reverse Mortgage
Counsellor (counsellor) for counselling service before applying the RMP. The
Handling fee
A handling fee of HK$1,000 will be charged for each change of payment term or
request for a lump-sum loan.
Other fees and expenses
The borrower will be responsible for the legal fee for execution of the mortgage
documents. For those property exceeding 50 years of age, a building inspection
report is required and the service charge shall be borne by the borrower.
Terms of Loan
Flexible payment term
There have different options for borrower to receive monthly payouts for either a
fixed period of 10, 15 or 20 years or the entire life according to his/her own
consideration. The borrower could apply to switch to another payment term during
the existing payment term.
Lump-sum loan
Apart from the monthly payouts, the borrower may apply to borrow lump-sum
term for 1) full repayment of an existing mortgage on the property which is
applicable only at the time of initial loan application; 2) payment for major repair
and maintenance of the property; 3) payment for medical expenses even though
the treatment is received outside Hong Kong and 4) payment for the fees payable
to the relevant solicitors and medical practitioners in connection with the enduring
power of attorney or the fees in connection with the application for a Court Order
under Part II of Mental Health Ordinance. Other purposes not listed above may be
considered on a case-by-case basis.
Loan Amount & Disbursement Methods
The monthly payout amount of RMP is determined by the calculation as refer to
the table below, which will be unchanged throughout the payment term and will
not be affected by the cost involved, movement in property price and interest rate,
inflation/deflation or other economic factors. However, if the borrower takes out a
lump-sum loan, the amount of his/her subsequent monthly payout will be reduced
Table 1: Scale of monthly payout amount (per HK$1 million of property value) Entry age 55 years old 60 years old 70 years old
Payment term One borrower Two borrowers One borrower Two borrowers One borrower Two borrowers 10-year $3,200 $2,800 $3,700 $3,300 $5,100 $4,600 15-year $2,400 $2,150 $2,800 $2,500 $3,800 $3,500 20-year $2,050 $1,800 $2,400 $2,100 $3,300 $3,000 Life $1,650 $1,450 $2,000 $1,800 $3,100 $2,800
Table 2: Maximum specified property value for payout calculation Appraised property
value Maximum specified property value for payout calculation HK$8 million or
less 100% of appraised property value Over HK$8 million
to HK$12 million higher of 80% of appraised property value and HK$8 million Over HK$12
million to HK$16 million
higher of 70% of appraised property value and HK$9.6 million
Over HK$16 million
higher of 60% of appraised property value and HK$11.2 million (capped at HK$15 million*)
General Application Flow
The general application flow of RMP involves 4 steps. The first one is
pre-application. Interested elderly homeowner could approach the participating
bank for more details and conduct a preliminary eligibility assessment for them.
Second is counselling. The potential borrower must meet an eligible consellor
before making a formal application for a reverse mortgage loan. The counsellor
obligations as well as the legal consequence of taking out a reverse mortgage loan
to the potential borrower. Upon the completion of the counselling, the counselor
will issue a counselling certificate to the potential borrow. And then is the formal
application. After obtaining the counselling certificate, the potential borrower may
approach any participating bank to make a formal application. Finally is the
execution of legal documents. Once the formal application is approved by the
bank, the borrower could receive the reverse mortgage loan after the execution of
the mortgage document.
Participating Banks
Up to now, there are totally 7 banks participating the RMP. Interested elderly
homeowners could obtain more details of RMP and proceed formal application
procedures with the banks including 1) Bank of China (Hong Kong) Limited; 2)
Bank of Communications Co., Ltd.; 3) Fubon Bank (Hong Kong) Limited; 4)
Nanyang Commercial Bank, Limited; 5) Shanghai Commercial Bank Limited; 6)
Chapter 3 – Methodology
3.1 Introduction
As mentioned in Chapter 1, this study aims to explore the possible ways to
enhance the RMP in Hong Kong by identifying the reason(s) of low participation
rate. Follow this logic, this study should first find out the reason(s) of low
participation rate of RMP in Hong Kong. The finding(s) would be analyzed and
recommendation in respect of the results could be made.
Hence, reference would be made to the previous studies on reverse mortgage and
a tailor-made study in respect of the aim of this dissertation would be constructed.
Refer to the topic “Evaluation of Reverse Mortgage of U.S.” in Chapter 2, several
surveys have been conducted in U.S. to assess the perception of consumers
towards reverse mortgage, including the “AARP survey in 2007”; “Harris
Interactive survey in 2007”; “Survey conducted by Leviton in 2001”; and “Survey
Generalizing the ideas of the above surveys which assessing the perception of
consumers towards reverse mortgage in U.S., the term “perception” could be
divided into 2 major aspects: I) Consumer’s Awareness and II) Consumer’s
Motivation, which consumer’s motivation may be affected by 3 main factors.
Therefore, this study would focus on these indicators and the following conceptual
framework would illustrate the logic of the study.
3.2 Conceptual Framework
The conceptual framework of the study is shown as below to illustrate the outline
and the flow of the study. By following the steps of the framework, the aim of the
Consumer's Awareness - Awareness
- Understanding
Consumer's Perception
Low Participation Rate of Reverse Mortgage Programme in Hong Kong
Consumer's Motivation - Interest on Future Application
Reason(s) of Not Applying RMP
Recommendation
Factors Affecting the Consumer's Motivation - Programme Content
- Legacy Concern - Psychological Factors
The conceptual framework is built on the previous studies on reverse mortgage in
U.S. in Chapter 2. It starts with the fact that the participation rate of RMP in Hong
Kong is low. In order to find out the reason(s) behind, the consumer ’s perception
would be studied and 2 main aspects would be investigated including I)
Consumer’s Awareness and II) Consumer’s Motivation.
The consumer’s awareness could be assessed by finding out the consumer’s
the meantime, it is necessary to address the factor(s) affecting the level of consumer’s motivation. According to the previous studies on reverse mortgage in U.S. in Chapter 2, 3 main factors could be generalized including i) Programme
Content; ii) Legacy Concern; and iii) Psychological Factors.
The findings on consumer’s awareness and consumer’s motivation would be
analyzed and that would be the reason(s) that consumers consider not to apply
RMP. And finally a recommendation in enhancing the performance of RMP could
be made in connection with the said reason(s).
3.3 Survey Design
A quantitative research was conducted in the study to collect primary data.
Questionnaire surveys were conducted by interviewing 100 homeowners aged 55
or above (i.e. those are eligible to apply RMP) who did not apply RMP. The
design of the questionnaire would be elaborated in the following part. Since some
of the questionnaires have not been returned successfully, finally 95 numbers of
3.3.1 Data Collection
For the recruitment of interviewees, convenience sampling and
snowball sampling were used. For convenience sampling, face to face
interviews were conducted near MTR stations and totally 60 numbers
of questionnaires surveys were completed. To enhance the
representativeness to the population, 20 numbers of questionnaires
were conducted near the MTR stations in Hong Kong Island; other 20
numbers of questionnaires were conducted near the MTR stations in
Kowloon and the remaining 20 numbers of questionnaires were
conducted near the MTR stations in New Territories. For snowball
sampling, 40 numbers of questionnaires were passed to my elderly
family members. Each of them received 10 numbers of questionnaires
and invited interviewees through social networking. However, 5
numbers of questionnaires could not be returned on time. In order to
avoid any delay to the completion of this study, only 35 numbers of
questionnaires were collected finally. Together with the 60 numbers
of questionnaires conducted by face to face interviews, totally 95
3.3.2 Questionnaire Design
The questionnaire is divided into 4 parts and a sample questionnaire
is attached in Chapter 8 – Appendix. Before going to Part 1, a brief
introduction to the questionnaire interview is provided to familiar the
respondents with the interview topic and the aim of the interview.
Also, the respondents would be understood that the information
obtained would be confidential and used for research purpose only.
Part I – Screening Questions
The purpose of the screening questions is to ensure the respondents
are eligible to apply RMP but did not apply before. Hence, the first
question asked if the respondents are aged 55 or above; the second
question asked if the respondents own a self-occupied property and
the third question asked if the respondents applied RMP. Should the
respondents reply “No” for the first and second questions and “Yes”
for the third question, the interview would be ended immediately and
Part II – Consumer’s Awareness to RMP
The questions asked in this part aim to collect data to assess the
consumer’s awareness to RMP, and for the further discussion whether
it would be the reason of low participation rate of RMP. Thus, the first
question asked if the respondents know RMP has been launched in
Hong Kong. Should the respondents reply “No” in this question,
he/she does not need to answer the remaining questions in Part II and
Part III since those would not be applicable. The second question
asked the respondents to rate their level of understating about RMP
and the third question asked the respondents from which medium they
heard about RMP. The questions aim to assess the respondent’s
awareness and understanding to RMP.
Part III – Consumer’s Motivation to RMP
The questions asked in this part aim to collect data to assess the
consumer’s motivation to RMP, and for the further discussion
whether it would be the reason of low participation rate of RMP.
Therefor the respondents were asked to rate the level of intention of
investigate the factors affecting the consumer’s motivation, several
questions were asked in respect of Programme Content, Legacy
Concern and Psychological Factor.
For programme content, 3 questions were asked to rate the
favorability in respect of 3 aspects of RMP including “Eligibility”, “Loan Cost” and “Loan Amount. The high/low favorability in respect of these 3 aspects would probably affect the consumer’s motivation to
RMP.
For legacy content, it is understood from the survey conducted by
Leviton in 2001 that elderly homeowners may wish to leave their
house to their children. This thought would affect their willingness to
apply RMP. Hence, 2 questions were asked to find out whether the
respondents would leave their self-occupied property to their children
and whether they would worry the future housing needs of their
For psychological factor, it is understood from the survey conducted
by Stephanie and George in 2009 that elderly may be skeptical about
the financial transactions that were unique or unusual. This thought
may also affect their willingness to apply RMP. In this connection, 2
questions were asked whether the respondents will consider not to
join RMP and no similar programme launched in Hong Kong before
and that RMP is not popular in Hong Kong.
Part IV – Demographic Information
Finally some demographic information was collected in this part of
the interview. The gender, age, education level, value of self-occupied
property owned, value of asset owned (excluding value of
self-occupied property owned) and household member of the
respondents were asked. The relationship between these six aspects
and the awareness and motivation to RMP of the respondents would
Chapter 4 – Data Analysis
4.1 Introduction
In this chapter, the data collected from the 95 numbers of questionnaires would be
analyzed. First of all, the data of the questionnaires would be divided into different
parts in accordance with the conceptual framework. And then the data would be
summarized and illustrated in Pie Chart respectively for easy perusal. Afterwards,
analysis would be made in accordance with the concerned data. Reference would
be made to the previous studies on reverse mortgage in U.S. in order to support
the findings drawn in the study.
The data analysis would be divided into 6 topics. This topic – “Introduction”
would be the beginning of the whole chapter for briefly describing the flow of the
chapter. Following the introduction is “Consumer’s Awareness”. It would be
divided into 2 sub-topics – “Awareness” and “Understanding”, each sub-topic
would be analyzed respectively. The third topic is “Consumer’s Motivation”. The
data of the respondents’ interest on applying RMP would be shown. After
findings on “Factors Affecting the Consumer’s Motivation”, which would be
elaborated in the fourth part. “Programme Content”, “Legacy Concern” and “Psychological Factors” would be discussed in this topic respectively. In the fifth topic, analysis would be made regarding the “Relationship between Consumer’s
Perception and Demographic Information“. Finally a “Summary” of the findings
from topic 2 to topic 5 would be conducted as the sixth topic.
4.2 Consumer’s Awareness
Consumer’s awareness would undoubtedly affect the participation rate of RMP in
Hong Kong. It is easy to understand that the fewer the people aware of the RMP
launched, the fewer the people would apply RMP. Yet, awareness does not focus
only on whether the people have heard of something, but also the understanding
on something. Hence, the previous studies on reverse mortgage in U.S. also
investigating the consumer’s understanding on reverse mortgage.
In this study, Part II of the questionnaire survey was conducted to assess the
awareness and understanding of the respondents on RMP. The results and analysis
4.2.1 Awareness
Question 2.1 “Do you know the RMP launched in Hong Kong?” and
question 2.3 “From which medium you heard about RMP?”
investigating the respondents’ awareness to RMP. According to
Figure 1 as shown below, 57.9% of respondents replied “Yes” in
question 2.1 whereas 42.1% of respondents replied “No”. It shows
that around 60% of respondents knew that RMP was launched in
Hong Kong.
Figure 1: Do you know the RMP launched in Hong Kong?
No 42.1%
Yes 57.9%
The result of question 2.1 is somewhat beyond expectation.
According to the studies of AARP survey in 2007, 70% of
respondents in U.S. stated that they have heard of reverse mortgages.
64% of respondents revealed that they aware of the reverse mortgage
as one of the mortgage products. Combining the findings of these two
surveys, it shows that the awareness of reverse mortgage in U.S. was
around 60% to 70% even the programme started over 10 years. It is
surprised that the awareness of reverse mortgage in Hong Kong is
similar to that in U.S. although the programme was launched only
around 3 years. The high level of awareness in Hong Kong may due
to effective promotion. As the size of Hong Kong is much smaller
than U.S., promotion of reverse mortgage is much easier in Hong
Kong than in U.S. However, the high awareness did not contribute to
the participation rate of RMP. In other words, there should have some
other factor(s) hindering the participation rate of RMP in Hong Kong.
In short, the level of awareness may not be the crucial reason
influencing the participation rate of RMP in Hong Kong.
Besides, according to Figure 2 as shown below, 85.5% of respondents
replied “Media” in question 2.3; 1.8% of respondents replied “Bank”;
12.7% of respondents replied “Relatives or Friend” and 0% of
heard about RMP from media. Only few of them heard about RMP
from other sources, which is not significant in comparison.
Figure 2: From which medium you heard about RMP?
Bank 1.8% Media 85.5% Others 0.0% Relatives or Friend 12.7%
The result of question 2.3 is remarkable. Although it is believed that
media would dominate the information provided regarding RMP, over
80% of respondents revealed that they heard about RMP from media
is still surprisingly high. The finding concurs with the idea from
Piotrow et al. (1990) that mass media can be a powerful too not only
for creating awareness about new technology but also for stimulating
people’s desire for more information and facilitating their efforts to
apply the information to their own behavior. According to the finding,
the HKMC and the related planners should further make use of the
effective in creating a positive social environment for a behavior by
bringing about shift in popular opinion (Parlato, 1990). In addition,
since only one (1.8%) respondent replied that he/she had heard about
RMP through bank, the result is totally disappointed and the
participated banks are recommended to spend more effort on the
promotion of RMP. The details would be discussed in Chapter 5 –
Recommendation subsequently.
4.2.2 Understanding
Question 2.2 “Please rate your level of understanding about RMP”
investigating the respondents’ understanding to RMP. According to
Figure 3 as shown below, 23.6% of respondents replied “Very Low”
in question 2.2; 52.8% of respondents replied “Low”; 23.6% of
respondents replied “High” and 0% of respondents replied “Very
High”. It shows that over 75% of respondents do not have sufficient
understanding to RMP (i.e. including the categories of “Very Low”
Figure 3: Please rate your level of understanding about RMP. Low 52.8% Very Low 23.6% Very High 0.0% High 23.6%
Actually it is not surprised to have the result of question 2.2.
According to the studies of Harris Interactive survey in 2007, 19% of
respondents expressed “not at all knowledgeable” to reverse
mortgage; 33% of respondents expressed “slightly knowledgeable”;
34% of respondents expressed “somewhat knowledgeable” and 15%
of respondents expressed “very knowledgeable”. Comparing this to
the data of Figure 3, it seems the people in U.S. are much familiar
with reverse mortgage. However, according to the studies of survey
conducted by Stephanie and George in 2009, open-ended question
was asked which most of the respondents revealed that they have
limited knowledge and even no knowledge to reverse mortgage. In
comparison, the level of understanding to reverse mortgage in Hong
surveys in U.S., the condition in Hong Kong and U.S. is somewhat
the same. Most of the people do not have sufficient understanding /
knowledge to RMP. In this connection, people could not know clearly
whether they are eligible to apply RMP and/or RMP is suitable for
them. It inevitably hinders the participation rate of RMP. On the other
hand, indeed, not many people (i.e. 23.6%) replied “Very Low” in
this question. It means that over three fourth of the respondents have
basic knowledge / understanding on reverse mortgage. It is similar to
the findings in U.S. Also, over 50% of respondents replied “Low” in
this question. Should more information could be provided to this
category of respondents, the overall level of understanding would be
much higher and the participation rate may be enhanced. The studies
of survey conducted by Stephanie and George in 2009 shared similar
idea, they found that they were able to change respondents’
perception of the program in a positive manner simply by describing
4.3 Consumer’s Motivation
Apart from consumer’s awareness, consumer’s motivation would also affect the
participation rate of RMP in Hong Kong. In this study, Part III of the questionnaire
survey was conducted to assess the consumer’s motivation of the respondents on
RMP. The respondents’ interest on future application of RMP and the favorability
level of RMP would be shown and discussed.
Question 3.1 “Please rate your level of intention of applying RMP” investigating
the respondents’ motivation to RMP. According to Figure 4 as shown below,
52.7% of respondents replied “Very Low” in question 3.1; 36.4% of respondents
replied “Low”; 10.9% of respondents replied “High” and 0% of respondents
replied “Very High”. It shows that only around 10% of respondents expressed
prominent interest on applying RMP in the future (i.e. including the categories of “High” and “Very High”).
Figure 4: Please rate your level of intention of applying RMP. Low 36.4% Very Low 52.7% Very High 0.0% High 10.9%
Question 3.2 “Please rate the level that RMP is favourable to you” investigating
whether the respondents think RMP is favourable. According to Figure 5 as shown
below, 50.9% of respondents replied “Very Low” in question 3.2; 36.4% of
respondents replied “Low”; 12.7% of respondents replied “High” and 0% of
respondents replied “Very High”. Similar to question 3.1, it indicates that only
around 10% of respondents think RMP is favourable to them (i.e. including the
categories of “High” and “Very High”).
Figure 5: Please rate the level that RMP is favourable to you. Low 36.4% Very Low 50.9% Very High 0.0% High 12.7%
The low level of intention of applying RMP and low level of favourability of RMP
revealed by the respondents reflect that the consumer’s motivation to RMP is low.
For the interest of applying RMP in the future, studies in U.S. conducted similar
surveys to assess. According to the studies of AARP survey in 2007, 14% of
respondents replied that they would consider applying RMP in the future. This
figure is similar to the finding of this study, meaning that Hong Kong is facing
similar problem with U.S. For the favourability of RMP, the U.S. study of Harris
Interactive survey in 2007 found that only 25% of respondents think reverse
mortgage is favourable to them. Although this figure is much higher than the
finding of this study, however, the difference is not significant concerning that
reverse mortgage has been developed in U.S. over 10 years. Nevertheless, it is
undeniable that the consumer’s motivation to RMP is very low in Hong Kong, and,
obviously that’s the crucial factor leading to the low participation rate of RMP in
Hong Kong. Hence, it is significant to find out the reason(s) and/or factor(s)
influencing the consumer’s motivation, which a detailed analysis would be
4.4 Factors Affecting the Consumer’s Motivation
The findings of the above topic expressed that the consumer’s motivation to RMP
is very low in Hong Kong, leading the low participation rate of RMP. Yet, why the
consumer’s motivation is so low? What is/are the main factor(s) causing the low
consumer’s motivation? Why this/these factor(s) exist? And how this/these
factor(s) influencing the consumer’s motivation?
According to the conceptual framework, three main factors were generalized with
reference to the previous studies in U.S. including i) Programme Content; ii)
Legacy Concern; and iii) Psychological Factor. The results of the questionnaire
survey in respect of these three factors would be shown in the following one by
one and detailed analysis would be provided as well.
4.4.1 Programme Content
Everyone should agree that the favourbility of the programme content
may affect the consumer’s motivation in applying RMP. For assessing
the favourbility of programme content of RMP, three major
amount. Hence, Questions 3.3.1 to 3.3.3 of the questionnaire
interview asked the respondents to rate the favourbility of these three
components respectively.
Question 3.3.1 “Please rate the level that the various aspects of RMP
is favoruable to you – Eligibility” investigating whether the
respondents think the eligibility aspect of RMP is favourable.
According to Figure 6 as shown below, 20.0% of respondents replied “Very Low” in question 3.3.1; 34.5% of respondents replied “Low”; 7.3% of respondents replied “High”; 0% of respondents replied “Very
High” and 38.2% of respondents replied “No Idea In Respect of
Eligibility”. It indicates that over 50% of respondents think that the
eligibility is unfavourable to them (i.e. including the categories of “Very Low” and “Low”). Also, around 40% of respondents revealed that they know nothing about the eligibility of RMP.
Figure 6: Please rate the level that the various aspects of RMP is favourable to you - Eligibility
No Idea In Respect of Eligibility 38.2% Low 34.5% Very Low 20.0% Very High 0.0% High 7.3%
In addition, question 3.3.2 “Please rate the level that the various
aspects of RMP is favoruable to you – Loan Cost” investigating
whether the respondents think the amount of loan cost of RMP is
favourable. According to Figure 7 as shown below, 9.1% of
respondents replied “Very Low” in question 3.3.2; 21.8% of
respondents replied “Low”; 1.8% of respondents replied “High”; 0%
of respondents replied “Very High” and 67.3% of respondents replied “No Idea In Respect of Loan Cost”. It indicates that although only around 30% of respondents think that the amount of loan cost is
unfavourable to them (i.e. including the categories of “Very Low” and “Low”), however, actually almost 70% of respondents revealed that they know nothing about the amount of loan cost of RMP.
Figure 7: Please rate the level that the various aspects of RMP is favourable to you - Loan Cost
No Idea In Respect of Eligibility 67.3% Low 21.8% Very Low 9.1% Very High 0.0% High 1.8%
Furthermore, question 3.3.3 “Please rate the level that the various
aspects of RMP is favoruable to you – Loan Amount” investigating
whether the respondents think the loan amount of RMP is favourable.
According to Figure 8 as shown below, 7.3% of respondents replied “Very Low” in question 3.3.3; 12.7% of respondents replied “Low”; 7.3% of respondents replied “High”; 0% of respondents replied “Very
High” and 72.7% of respondents replied “No Idea In Respect of Loan
Amount”. It indicates that although only around 20% of respondents
think that the loan amount is unfavourable to them (i.e. including the
categories of “Very Low” and “Low”), however, actually over 70% of
respondents revealed that they know nothing about the loan amount
Figure 8: Please rate the level that the various aspects of RMP is favourable to you - Loan Amount
No Idea In Respect of Eligibility 72.7% Low 12.7% Very Low 7.3% Very High 0.0% High 7.3%
According to the results of the questionnaire survey, it is obviously
shown that the favourbility level of RMP is extremely low as
expressed by the respondents. Over 90% of respondents replied “Very
Low”, “Low” or “No Idea” in respect of eligibility, loan cost and loan
amount. Eligibility is the most favourable aspect when comparing to
the other two aspects. At least over 60% of respondents stated that
they have concept about that. However, it is surprised that 20% of
respondents expressed “Very Low” in respect of the favourbility of
eligibility. Since the respondents are all eligible to apply RMP, it is
anticipated that they should have no serious concern to the eligibility.
For the loan cost and loan amount, it is hard to assess the favourbility
level as around 70% of respondents revealed that they have no idea in
In this connection, two major findings could be deduced in respect of
the programme content. First, the respondents may be confused
and/or misunderstand some of the programme content. For example,
those who replied “Very Low” for eligibility are all eligible to apply
RMP. It seems that the respondents did not clearly know or mixed up
with the details of eligibility. Second, most of them have no idea with
the details of programme content. Combining these two findings
together, it could be analyzed that the programme content of RMP
should be too complicated for the elderly to understand. It is
consistent with the finding of figure 3 that over 75% of respondents
do not have sufficient understanding to RMP. The complicated
programme content would undoubtedly affect the consumer’s
motivation to RMP. According to the studies of survey conducted by
Stephanie and George in 2009, it suggested that the respondents’ lack
of interest on reverse mortgage can be attributed to asymmetric
information. They found that the respondents stated the simpler
features of the reverse mortgage most attractive while finding other
features confusing. In short, the respondents tend to prefer simplicity
these features, the more inclined they were to express interest on
reverse mortgage.
The reference from the studies of survey conducted by Stephanie and
George in 2009 is in line with the findings of this study. Elderly tend
to accept or select simple stuff which could be easily control or
monitor. In addition, it shares similar idea with Peterson (2002) that
elderly may fear of being victimized by complex financial transaction.
Hence, instead of enhancing the programme content such as
increasing the loan amount, simplifying the programme content
would probably achieve a more desirable result.
4.4.2 Legacy Concern
From the studies of the survey conducted by Leviton in 2001, it
suggested that one’s decision on receiving reverse mortgage would be
influenced by the desire to leave a legacy. Thus, apart from
programme content, legacy concern to the consumer’s motivation to
RMP was assessed in this study. Questions 3.4 and 3.5 of the