Hong Kong Announces Pilot Program for Reverse Mortgages

The Hong Kong Mortgage Corporation Limited (HKMC) has approved the launch of a pilot reverse mortgage program in 2011.

According to t HKMC, the decision was reached after extensive consultation with the key stakeholders and a territory-wide survey of the potential users.

The survey (conducted in October and November 2010) interviewed 1,005 homeowners aged 60 or above, whose properties were mortgage-free or almost mortgage-free.  About 44% of the respondents supported the introduction of reverse mortgage in Hong Kong and almost a quarter of the respondents indicated that they would consider participating.


The program will allow seniors to obtain a revere mortgage on their primary residence and receive monthly payments over a fixed period of 10, 15, or 20 years or over their whole life span, while they will continue to be responsible for the on-going property maintenance as well as the settlement of rates, government rents and management fees, etc.

“The HKMC will actively engage banks interested in participating in the pilot scheme to finalize the detailed arrangements with a view to launching it in the first half of 2011,” said Peter Pang, the Executive Director of the HKMC.  “In particular, an effective pre-sale counseling mechanism will be devised to ensure that the borrowers will have a good understanding of their rights and obligations before drawing reverse mortgage loans.  We hope that with  the introduction of reverse mortgage, elderly people can have an additional means to obtain steady cash flows to improve their standard of living while staying in their own home.”

As of now, the program seems to be structured much like the Federal Housing Administration’s HECM product, which requires counseling prior to borrowers obtaining the loan.  The program will also have insurance that is covered by HKMC.

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  • Hong Kong is following a proven model of home equity conversion — HECM, the “gold standard” among reverse mortgage products world-wide, in the words of HUD’s Edward J. Szymanoski, a principal architect of HECM 21 years ago.

    Why reinvent the reverse-mortgage wheel when America has been perfecting it? Congratulations HKMC!

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