From the perspective of consumption preference and bequest preference, this paper constructs a financial actuarial model and studies thelifetime value change of senior citizens to participate in housing reverse mortgage(HRM). The research results are as follows: (1) The trade-off between changes in the value of consumption and inheritance is the main decision rule to participate in housing reverse mortgage(HRM), and the intensity of bequest motivation is an important constraint mechanism to the lifetime expectation value of the senior citizensparticipating in housing reverse mortgage(HRM); (2) When the bequest motivation of the elderly is relatively weak, the elderly have conversely strong consumption preference, and the elderly participating in the non-redemption HRM can obtain higher lifelong value change; (3) When the bequest motivation of the elderly is relatively strong, the elderly have correspondingly strong bequest preference. Participating in the HRM with redemption option can realize the option of retaining part of the heritage value and reduce the volatility of heritage loss. Therefore, the restriction of bequest motivation on the demand of the elderly can be reduced to a certain extent, which is more suitable for the retired residents with strong heritage motivation.
MillerJ.J., NikajS. and LeeJ.M., Reverse mortgages and senior property tax relief [J], Advanced Science Letters24(6) (2018), 4623–4625.
2.
MoultonS., HaurinD.R. and ShiW., An analysis of default risk in the Home Equity Conversion Mortgage (HECM) program [J], Journal of Urban Economics90 (2015), 17–34.
3.
HanW., WangP., XuH., et al., Evaluation of the Reverse Mortgage Option in Hong Kong [J], Asian Economic Journal31(2) (2017), 187–210.
4.
LeeY.T., WangC.W. and HuangH.C., On the valuation of reverse mortgages with regular tenure payments [J], Insurance Mathematics & Economics51(2) (2012), 430–441.
5.
DillinghR., PrastH., RossiM., et al., Who wants to have their home and eat it too? Interest in reverse mortgages in the Netherlands [J], Journal of Housing Economics38(1) (2017), 25–37.
6.
YangS.S., Securitisation and Tranching Longevity and House Price Risk for Reverse Mortgage Products [J], Geneva Papers on Risk & Insurance Issues & Practice36(4) (2011), 648–674.
7.
MoultonS., HaurinD.R. and ShiW., An analysis of default risk in the Home Equity Conversion Mortgage (HECM) program [J], Journal of Urban Economics90 (2015), 17–34.
8.
ChinloyP. and MegbolugbeI.F., Reverse Mortgages: Contracting and Crossover Risk [J], Real Estate Economics22(2) (1994), 367–386.
9.
PolkovnichenkoV., Life-cycle portfolio choice with additive habit formation preferences and uninsurable labor income risk [J], The Review of Financial Studies20(1) (2001), 83–124.
10.
FlavinM. and YamashitaT., Owner-Occupied Housing: Life-Cycle Implications for the Household Portfolio [J], American Economic Review101(3) (2011), 609–614.
11.
HaurinD., MaC., MoultonS., et al., Spatial Variation in Reverse Mortgages Usage: House Price Dynamics and Consumer Selection [J], Journal of Real Estate Finance & Economics53(3) (2016), 392–417.
12.
NaH. and LeiS., The Development Characteristics of “Housing for the Aged” in the West and China’s Path Choice [J], Reform of Economic System2014(5), 157–161. (in Chinese).
13.
WeiW. and YaG., International Experience and Enlightenment of Housing Reverse Mortgage [J], Journal of Finance and Economics2016(2) 60–63. (in Chinese).
14.
JianC. and ShaoH., Trade-offs between Bequest Motives and Wealth Effects: Is Housing Reverse Mortgaging in China Feasible? [J], Economic Research Journal2013(9), 56–70. (in Chinese).
15.
XiongJ.W., ZhongZ.B. and LiA.Q., Security Replacement, Inter-Generation Contract and Information Inducement: Determinants of Intention of Participating in Housing Reverse Mortgage Based on Survey Data from Wuhan [J], Population Research2017(01), 48–60. (in Chinese).
16.
ZhengB.W., Top-level Design of the Third Pillar“Individual Pension Account”: The Leverage Role of Taxation and Its Far-reaching Effect [J], Journal of Renmin University of China30(1) (2016), 2–11. (in Chinese).
17.
ShaoA.W., HanewaldK. and SherrisM., Reverse mortgage pricing and risk analysis allowing for Idiosyncratic house price risk and longevity risk [J], Insurance Mathematics & Economics63 (2015), 76–90.
18.
HaurinD., MaC., MoultonS., et al., Spatial Variation in Reverse Mortgages Usage: House Price Dynamics and Consumer Selection [J], Journal of Real Estate Finance & Economics53(3) (2016), 392–417.
ShuL.C., MingS.T., BeladiH., et al., Analyzing an elder’s desire for a reverse mortgage using an economic model that considers house bequest motivation, random death time and stochastic house price [J], International Review of Economics & Finance42 (2016), 202–219.
21.
DavidoffT., GerhardP. and PostT., Reverse Mortgages: What Homeowners (Don’t) Know and How it Matters [J], Journal of Economic Behavior & Organization133 (2017), 151–171.
22.
NakajimaM. and TelyukovaI.A., Reverse Mortgage Loans: A Quantitative Analysis [J], Journal of Finance72(2) (2017), 911–950.
23.
MaS. and DengY., Insurance Premium Structure of Reverse Mortgage Loans in Korea [J], Working Paper (2006).
24.
LeeY.T., WangC.W. and HuangH.C., On the valuation of reverse mortgages with regular tenure payments [J], Insurance Mathematics & Economics51(2) (2012), 430–441.
25.
ChenB.Z., QinP. and DengY.L., A Study on Pricing of the Reverse Mortgage with an Embedded Redeemable Option [J], Review of Investment Studies33(05) (2014), 97–109. (in Chinese).
26.
HaurinD., McgrealS., AdairA., et al., List price and sales prices of residential properties during booms and busts [J], Journal of Housing Economics22(1) (2013), 1–10.
27.
TsayJ.T., LinC.C., PratherL.J., et al., An approximation approach for valuing reverse mortgages [J], Journal of Housing Economics25 (2014), 39–52.
28.
GuoN. and LiangQ., Real estate cycle and Financial stability in China: Empirical analysis from random walk filter[J], Nankai Economic Studies27(4) (2011), 98–107. (in Chinese).
29.
BaS.S. and TianL., Housing price fluctuation, Monetary policy and Economic fluctuation: DSGE analytic framework”, Contemporary Finance & Economics36(8) (2015), 3–16. (in Chinese).
30.
HanW. and JiangY., Economic validity analysis of housing reverse mortgages in China: The perspective of the financial decisions of the elderly [J], China Finance Review International9(4) (2019), 498–520.
31.
HanW., The analysis on Chinese e-commerce tax losses based on the perspective of information asymmetry [J], Electronic Commerce Research20(3) (2020), 651–677.
