Hongkongers should use reverse mortgages to lock in stable incomes and overcome economic hardships, say industry observers
- A reverse mortgage is a loan arrangement available to borrowers who are 55 years old or older, and it allows them to use their property as security for a bank loan
- The reverse mortgage programme, which was introduced in 2011, has been rolled out quite slowly, industry observers say
Elderly Hongkongers should consider the government’s reverse mortgage programme to secure fixed and stable incomes during the city’s worst recession on record and rising unemployment, industry observers said.
It is a good time to do a reverse mortgage as borrowers can probably get the best price for their homes at this point, said Wong Wing-yan, the managing director of Ricacorp Mortgage Agency. “We are not sure how long the recession in Hong Kong will last and whether the global economy will recover soon,” she said, adding that if the economy continues to worsen, more jobs could be lost and the quality of people’s assets might shrink.
“The idea is good, but the government needs to step up its promotion of the programme and let the public know that it has this option,” Wong said, adding that the government could pay property agencies for referring cases to banks. “Currently, we do not have such a service, as we cannot make a profit from it,” she said.
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New reverse mortgage applications increased by 8.5 per cent quarter on quarter in the first three months of the year, according to data provided by Centaline Property Agency. Ninety-eight new cases were recorded in the first quarter of this year.