Top adviser airs doubts on reverse mortgages
The head of a high-powered advisory body on government policies for the elderly urged a rethink on controversial reverse mortgages for elderly people before they were launched next year, as many key issues had yet to be resolved.
Critics said reverse mortgages could never be a substitute for a long-awaited comprehensive retirement plan, which should be started without further delay.
Speaking at RTHK's City Forum yesterday, Elderly Commission chairman Dr Leong Che-hung said one of the major problems with the reverse mortgage scheme would be that elderly people who outlived the mortgage period would no longer receive monthly annuity payments.
The pilot scheme for reverse mortgages, announced by the Hong Kong Mortgage Corporation this month, would enable the elderly to use their self-occupied and non-mortgaged homes as collateral for reverse mortgage loans in return for annuity payments while they continued living in those residences.
Eligible borrowers - aged 60 or above - could choose to receive monthly annuity payments over a fixed period of 10, 15 or 20 years or over their lifespan.
'Some elderly people may choose to receive monthly annuity payments in smaller amounts for a longer time. But would these be enough to make ends meet?' Leong said.
'In principle, the option of a reverse mortgage, which has been implemented in different places overseas, can be considered. But its details really need to be worked out carefully.'
He also warned of possible family disputes when family members did not agree to use the owner-occupied home of an elderly person as collateral for a reverse mortgage loan.
One audience member said the administration should consider raising taxes to fund a comprehensive retirement plan for Hong Kong.
Au Yeung Kwun-tung, organiser of the Alliance for Universal Pension, said the reverse mortgage scheme would only benefit banks and developers who could more easily resume the properties belonging to elderly people for future redevelopment.
Wong Hung, associate professor of social work at Chinese University, said as the city was now experiencing an economic boom it could afford to start the long-awaited retirement policy for all Hongkongers.
'In view of the demographic trend, we still have around 15 years before Hong Kong is dominated by an elderly population. Therefore, the government should launch a comprehensive retirement scheme with no further delay,' Wong said.
The reverse mortgage scheme was first proposed by the Bauhinia Foundation Research Centre, in June, as a way for the elderly to ease their financial burden in retirement.
The mortgage corporation HKMC estimated that an eligible 60-year-old property owner could receive about HK$1,800 a month based on a home valued at HK$1 million.