The Pricing Model And Practical Research Of Housing Reverse Mortgage Loan

Housing reverse mortgage loan as a new way provided to the aged, through releasing the value of the house to increase the income level of the elderly after retirement has gradually become the fourth pension industry pillar in the developed. In response to the increasingly serious situation of the aging population, we introduce the new concept of "Housing Endowment" since the beginning of the 21st Century. And we have conducted pilot projects, but all ended in failure. In-depth study of the reverse mortgage will help promote its development in China.This paper systematically studies the theoretical basis and mode of operation of the housing reverse mortgage, learns the development experience of housing reverse mortgage market from the United States as the representative of developed countries, analyzes and summarizes lessons and necessary conditions in the early development of the reverse mortgage market in China. On this basis, the paper builds a loan pricing model. According to the idea of asset pricing theory CAPM model, we use the discount rate containing a risk premium to discount cash flows of the housing reverse mortgage products in order to determine asset prices. The model fully considers the growth of the house value, house depreciation rate, the cost of the beginning and ending and other factors. We distinguish between a lump sum payment and life annuity payment to build models, and creatively present the product pricing model under gradual increasing annuity payment.Then, the paper selects Jinan’s real estate market data to simulate housing reverse mortgage in Jinan. We get the obtained amount of loans between different ages and genders at different methods of payment, and analyze the sensitivity of the related parameters and determine the main risk factors for pricing. At the same time, we select the pension replacement rate as the index to calculate the improvement of the level of old-age care, and analyze the social utility through carrying out housing reverse mortgage.The results show that carrying out reverse mortgage in Jinan City, the eldly with the house worthy 800,000 yuan can get a higher loan funds, and the pension replacement rate can be improved at a lot. In addition, the result of the pricing model is sensitive to the house depreciation rate, the growth rate of house value and the interest rate. So in practical operation, the actuarial assumptions should be set carefully. The result of the pricing simulation has a strong reference value for the second-tier cities as Jinan which conduct housing reverse mortgage business.