After the recent launch of a reverse mortgage proposal in an effort to help solve China’s long term care crisis, the loans are facing scrutiny among China’s residents.
The government’s backing of the program has “reignited a debate” regarding acceptance of reverse mortgages by a tradition-minded population, according to the South China Morning Post.
Reverse mortgages have been tested already in some cities in China, with the most recent proposal made on September 14 to launch a “home for pensions” program that will allow people ages 60 and older to use their home equity to pay for nursing care. The program is expected to roll out some time next year.
But several residents who responded to local publications expressed feelings of skepticism regarding the loans, citing reasons including the potential for the bank to become insolvent before they died or wanting to leave a home to their heirs.
“The Workers’ Daily interviewed several elderly about the scheme,” said the South China Morning Post. “They were largely skeptical, saying the bank could become insolvent before they died. In any event, property should be left to one’s children, they said. ‘It’s not I alone who can make a decision on the property,’ one person said. ‘What would my children think?'”
News outlets gathered mixed responses to the proposal, but advocated more research about the options offered by reverse mortgages.
“The China News Service said the policy had come at the wrong time, amid a flood of coverage over the government’s pension fund going into the red and the retirement age possibly being extended. The public was therefore likely to question the motives behind the plan,” the article writes.
“But it defended the policy as a way to put assets to use. It was the government’s responsibility to create possibilities for people to retire in better financial shape, and a house-for-pension scheme that lead to a strong property market should be applauded.”
View the original coverage by the South China Morning Post.
Written by Elizabeth Ecker