A fledgling reverse mortgage market in Germany sees room to grow through two products now being offered by a large bank and a large life insurance company.
While the German government does not yet support a reverse mortgage product, the private financing has proven successful in the first 1,000 or so reverse mortgages originated since the product launched in 2010.
“The market is huge and we have a demographic problem,” says Lutz Schroeder, of ImmoKasse, which offers a reverse mortgage product in cooperation with Deutsche Kreditbank. “At the Moment we have 4.2 million houseowners aged 65 and older,” Schroeder told RMD in an email. “Eighty percent of wealth was invested in their homes. The pensions are declining. House prices are rising steadily.”
Currently, the minimum age requirement for the two products available in Germany is 65, and borrowers are able to draw on 15% to 30% of their home value. ImmoKasse, founded by a family and private equity partners created the IRP product while the other product, Immobilienrente was created by R und V Versicherungen, a large life insurance company that uses its banking channel to originate reverse mortgage sals. ImmoKasse offers both products, Schroeder told RMD.
The market is positioned for substantial growth, he says, as the population ages and traditional retirement options decline as they have in the United States and elsewhere.
“My personal opinion is that the market [in Germany] will be able to become as big as the UK one, at 30,000 new reverse mortgages per year,” Schroeder said.
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