Hutchison, N., MacGregor, B. orcid.org/0000-0002-9967-7884, Ngo, T. orcid.org/0000-0002-6090-8067 et al. (2 more authors) (2024) The reverse mortgage market in New Zealand: key drivers of loan determination. Applied Economics. ISSN 0003-6846
Abstract
This paper examines the drivers of loan principals in the reverse mortgage and equity release market in New Zealand using a hedonic price model (HPM) approach. Our analysis using reverse mortgages data between 2004–2021, sourced from one major reverse mortgage bank, provides four key findings. First, the term of payment for repaid reverse mortgages is positively associated with loan principals, implying that longer repayment terms allow applicants who were able to repay mortgages to borrow more. Second, there is partial evidence to suggest the presence of a positive linear impact of the value of the current property on its loan principal, in line with previous house price modelling studies. Third, older applicants (age 75+) borrow less than younger applicants, which may be due to their repaying ability. Fourth, we confirm a positive effect of interest rates on reverse mortgage amounts but reject the positive association between wider loan-to-value policy restrictions and equity release lending amounts. The results broadly highlight that the house price is more relevant than any individual characteristic of a property in determining loan principals, and that all drivers are relevant in the early stage of the development of the reverse mortgages market in New Zealand.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2024 The Authors. Except as otherwise noted, this author-accepted version of a journal article published in Applied Economics is made available via the University of Sheffield Research Publications and Copyright Policy under the terms of the Creative Commons Attribution 4.0 International License (CC-BY 4.0), which permits unrestricted use, distribution and reproduction in any medium, provided the original work is properly cited. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/ © 2024 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives License (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited, and is not altered, transformed, or built upon in any way. The terms on which this article has been published allow the posting of the Accepted Manuscript in a repository by the author(s) or with their consent. |
Keywords: | Reverse mortgages; equity release; ageing population; housing finance |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Management School (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 08 Apr 2024 09:32 |
Last Modified: | 17 Apr 2024 08:28 |
Status: | Published online |
Publisher: | Informa UK Limited |
Refereed: | Yes |
Identification Number: | 10.1080/00036846.2024.2334768 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:211246 |
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