http://www.straitstimes.com/archive/...udied-20141009

Reverse mortgage not a popular option, but will be further studied

Published on Oct 9, 2014 1:15 AM

By Walter Sim


AN ONGOING study into reverse mortgage schemes in other countries has shown that their take-up rates are low, Minister for National Development Khaw Boon Wan said yesterday.

Still, the Government will continue to study the scheme, which allows a property owner to convert some of the value of the home he owns into cash while still living in it, he added.

He did not name the countries under study but said: "I'm not giving up and we want to continue to explore."

He also said that "as the reverse mortgage is a complex financial product, we need to study it carefully, before we decide whether to introduce it as an additional option for our seniors."

Mr Khaw made the point in Parliament when replying to Ms Lee Bee Wah (Nee Soon GRC), who had asked for an update on the study. He noted that insurer NTUC Income previously offered such a scheme, but it did not take off. Only 24 households took it up between its launch in 2006 and it being scrapped in 2008.

While there are no regulations stopping financial institutions from offering the scheme to private property owners, the fact that they are not doing so indicates a lack of demand, he added.

Despite its unpopularity, the Government is still looking at whether there have been "changes in the business model" which may make it suitable for some.

Mr Zaqy Mohamad (Chua Chu Kang GRC) asked how the Government will help citizens differentiate between reverse mortgages, if these are offered, and the current Lease Buyback Scheme, that lets owners of HDB flats of up to three rooms sell part of their remaining lease back to the Government. This will be extended to four- room flats from next April.

"The key is informed decision-making, which therefore means very close handholding," said Mr Khaw. "If we were to offer such products, our staff have to be well-trained so that we can conduct individual counselling and go down to the specifics… because these are long-term commitments - 30 years, 40 years - down the road."

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