To revive the nation’s reverse mortgage policy, the Financial Supervisory Commission (FSC) said it would hold talks with the Ministry of Health and Welfare to optimize existing measures.
As the momentum of the policy had slowed over the past few years, the FSC aims to explore if it is possible to link the policy to social benefit programs, it said.
Newly approved reverse mortgages totaled NT$4.8 billion (US$169,575 million) last year, the lowest since the policy was launched in 2015, FSC data showed.
Photo: Kelson Wang, Taipei Times
From 2016 to 2019, annual reverse mortgages were NT$6.2 billion, NT$5.5 billion, NT$5 billion and NT$5.8 billion respectively, it showed.
The policy allows homeowners above a certain age to use their property as collateral to borrow money, with the options to get a lump sum or monthly payouts.
For example, a reverse mortgage with a 70 percent loan-to-value ratio on a property worth NT$18 million would allow for monthly payouts of NT$35,000 for 30 years.
Most banks only grant reverse mortgages to homeowners aged 60 or older, the FSC said.
“Consumers have become cautious toward reverse mortgages and are increasingly hesitant to use their house as loan collateral,” Banking Bureau Deputy Director-General Lin Chih-chi (林志吉) said. “Most Taiwanese believe that a person cannot be wealthy without owning property.”
Older homeowners interested in the mortgages might be persuaded by their children to not apply, because the children are eyeing their future inheritance, Lin said.
Local banks’ offerings under the policy are not as strong as other financial products, because they are vulnerable to increased longevity, falling prices for some properties and other risks, he said.
State-run banks continue to have the largest reverse mortgage programs, with Taiwan Cooperative Bank (合作金庫銀行), Land Bank of Taiwan (土地銀行) and Hua Nan Commercial Bank (華南銀行) approving the most mortgages last year.
Taiwan Cooperative Bank approved 314 new loans totaling NT$1.9 billion, Land Bank approved 193 new loans totaling NT$1.1 billion and Hua Nan Commercial Bank approved 87 new loans totaling NT$500 million, the data showed.
Most non-state-run lenders remain on the sidelines over concerns about credit risk and a lack of government assurance, the FSC said.
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