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UNSW Business School to examine reverse mortgages

Monetary growth

CEPAR researchers will investigate behavioural and other issues behind the low uptake of reverse mortgages in Australia in a project supported by the UNSW Business School and Household Capital.

UNSW Media Release

A reverse mortgage is a loan that enables homeowners to access their home equity; the homeowner can borrow without having to make repayments while living in the home.

Home equity is typically the largest component of total household wealth, so a reverse mortgage can complement superannuation and the age pension as a financial resource in retirement.

Senior Research Fellow Dr Katja Hanewald and Professor Hazel Bateman will investigate theoretical and empirical aspects of reverse mortgage demand and product design.

“While economic theory predicts that households would demand reverse mortgages to improve retirement funding, the take-up rates for reverse mortgages are low in Australia and internationally,” said Dr Hanewald.

The Business School is funding the two-year research project with industry partner Household Capital, which offers services to enable older Australians to combine their superannuation, pension and home equity to provide retirement funding.

The research team will investigate the impact of behavioural factors as an explanation for subdued reverse mortgage demand. “Combining our research track record and Household Capital’s industry expertise, we will design and field test an online experimental survey to study the role of mental accounting in the demand for reverse mortgages,” Dr Hanewald said. “By investigating behavioural explanations to the ‘reverse mortgage puzzle’, this research will address demand- and supply-side barriers to further development of a reverse mortgage market in Australia and internationally.”

Dr Joshua Funder, CEO and founder of Household Capital, said: “Overseas markets have been expanding rapidly to provide access to home equity to fund retirement.”

“We’re delighted to work with UNSW Business School to understand the needs of Australian retirees and how we can improve access to home equity to improve retirement their funding.”


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