Fornero, Elsa
[VerfasserIn]
;
Rossi, Maria Christina
[Sonstige Person, Familie und Körperschaft];
Urzi, Cesira
[Sonstige Person, Familie und Körperschaft]
Explaining Why, Right or Wrong, (Italian) Households Do Not Like Reverse Mortgages
Erschienen in:Netspar Discussion Paper ; No. 09/2011-086
Umfang:
1 Online-Ressource (22 p)
Sprache:
Englisch
DOI:
10.2139/ssrn.1950519
Identifikator:
Entstehung:
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments September 1, 2011 erstellt
Beschreibung:
According to economic theory, elderly homeowners should be much more eager than they actually are to adopt financial instruments allowing them to borrow against home equity. This paper investigates the determinants of interest for the Italian elderly in one such instrument, the reverse mortgage. We draw from a unique dataset, UniCredit's 2007 survey on household savings, and use a discrete choice model (ordered probit) to perform our empirical analysis. Out of 1,200 respondents, roughly 60% claimed to have no interest in the product, while the remaining 40% expressed various degrees of appeal, from quite low to very high. Three main findings emerge from our analysis: first, homeowners who are prepared to sell their home are more likely to be interested in the product. Second, respondents perceive reverse mortgages as personal debt, even though the burden of repaying the loan lies with their heirs, and debt aversion predicts low interest. Third, homeowners who are more concerned about their standard of living in retirement are more likely to be interested in the product. We find, however, no conclusive evidence supporting our a priori notion that greater financial literacy is a predictor of higher interest in RMs