Pages: 1-17

Abstract

Malaysia is expected to become an ageing nation by the year 2020, when 10% of its population will fall within the age group 60 years and above. One of the challenges heralded by this development is income insecurity among the elderly population, who by virtue of their age are forced on retirement thereby making them to rely heavily on pension, social security or filial transfers, which in most cases are not sufficient to cater for their needs. Despite the fact that the elderly are “cash-poor”, however, they are in most cases considered to be “asset-rich” by virtue of the possession of substantial wealth in form of housing equity that is trapped in their residential homes, which if released, can provide considerable income that can augment their existing source of income. Reverse mortgage offers the avenue where elderly people can access the trapped wealth in their residential home by releasing the housing equity therein in order to improve their welfare. This paper explores the prospects of developing reverse mortgage product market in Malaysia by presenting a SWOT analysis based on the synthesis of extant literature on the factors driving the demand and/or willingness of individuals to use the product as a source of supplementary income and consumption smoothing option in old-age. The analysis is expected to spur discussion on the subject as the country targets to become a high income economy