CTBC Bank Co Ltd (中國信託銀行) this week said that it is planning to launch reverse mortgage products for older homeowners in the second half of this year, which would make it one of the first entrants into a market segment that has been overlooked by non-state-run banks.
Taipei Fubon Commercial Bank (台北富邦銀行) also announced recently that it will be entering the segment in the first half of this year.
Reverse mortgages allow homeowners aged 65 and over to tap into the equity of their homes and borrow money to gain disposable income during their retirement, and has seen a rise in developed markets affected by slowing birth rates and aging populations.
Under the arrangement, retirees may continue living at their current homes, while their heirs may still inherit their homes by either repaying or extending the reverse mortgage term.
A survey conducted by CTBC Bank published on Thursday showed that 74 percent of respondents know about reverse mortgage products, with 46 percent saying they are considering the option for their retirement.
A majority of respondents aged between 50 and 69 indicated that they have heard of reverse mortgage products, but many mistakenly thought that they would not be able to continue living at their current homes after signing on.
Respondents above the age of 70 were the most receptive, with 49 percent saying that they are considering reverse mortgages.
However, among the 28 percent of respondents who have ruled out reverse mortgages, 60 percent indicated that they have ample funds for retirement, while 40 percent said that they remain undecided on how their home properties and estate would be administered and distributed, the survey showed.
Among the respondents, 32 percent said that they wish to let their children inherit their homes, the bank said, adding that the outcome is in line with local traditional expectations.
The bank added that 43 percent of respondents see reverse mortgage as a flexible and fair option for estate management.
Among those considering adopting reverse mortgages for estate planning, a majority said that they are looking to establish an investment trust account on behalf of their children.
Only 31 percent are planning to evenly distribute among their heirs a lump sum cash payment gained from the arrangement.
The online survey questioned 1,549 CTBC Bank clients above the age of 20 between Jan. 21 and Feb. 4 with a margin of error of 2 percent.
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