Consumption-Portfolio-Housing Choice with Reverse Mortgages

Project Start:01/2019
Researchers:Christoph Hambel, Holger Kraft, André Meyer-Wehmann
Category: Household Finance
Funded by:LOEWE

This project aims to study a household’s optimal demand for a reverse mortgage. These contracts allow homeowners to tap their (non-liquid) home equity to finance consumption needs. We study both analytically tractable as well as numerically demanding versions of models that involve the option for agents to enter reverse mortgages. In particular, we want to study what drives the demand for reverse mortgages and how and to which extent unanticipated health shocks and financial disasters alter the decision to enter reverse mortgages.

Related Working Papers

No.Author/sTitleYearProgram AreaKeywords
293Christoph Hambel, Holger Kraft, André Meyer-WehmannWhen Should Retirees Tap Their Home Equity?2020 Household Finance reverse mortgage, consumption-portfolio decisions, optimal stopping, biometric risks, financial disasters