Housing, Reverse Mortgage And Its Risk Research

Aging population has become a serious problem in the whole world. And the phenomenon such as lower life-quality and lacking funds carried by aging population has become more severe. In most countries, old people have a relatively bigger house assets after the decades of hard workings. But after retirement they always have lower income or no income at all .So lots of " the rich of house property , the poor of the cash " have appeared. To solve this problem, another new financial instrument -Reverse Mortgages (RM) have developed quickly in the developed countries especially in U.S.A. And more and more government administrators began to use this instrument to improve the pension system.There is an obvious characteristic of population aging in China—"aging without richness", China must face a serious problem of elderly funding shortage decades later. House has double properties: habitation and investment, which also the main wealth of elderly households. But during the process of aging, house just only plays the function of habitation, its asset characteristic isn't utilized sufficiently. This couldTherefore, this paper intend to introduce an advanced pension system—RM in order to release the burden of country, families, children to support of the elderly people, and make up the shortcoming of current elderly security system, which is very meaningful to our system reformation atpresent. What need to emphasis is that this paper concentrates on RM's content , operation mechanism and the risk. The main issue is that the influence and the avoiding methods of interest risk and house price fluctuational risk.The full text have six parts: (1) Summary of RM. Introduce the RM's content , the variety , the operation mechanism and foreign experiences regarding the carry-out of America , Canada , France and Singapore; (2) Basical theories of RM.(3)Risk analysis of RM, which is the key part in this text. I have discussed several risk factors including interest risk , house price fluctuate risk .mobile risk , macrobiotic risk , morals risk and reverse choice .(4) Interest risk and the precautionary measures. By setting up a interest risk-measured model, I draw the conclusion that RM suffers a tremendous influence from interest rate compared with the government debts and ordinary mortgages. (5)House price fluctuate risk and precautionary measures. By setting up a price risk model, I draw the conclusion that this risk has the important influence on the RM and provide the concrete precautionary technology. (6) The necessity and feasibility of RM's implementation in China. In this part, I studied the current situation of aging population in China and provide two feasible respects.