Wharton Pension Research Council Working Papers

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Working Paper

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This paper examines the usage of reverse mortgages among mortgage borrowers, as well as rejected applicants for new mortgage credit who are age 62+. We find that 17-27 percent of actual and rejected borrowers would have qualified for a HECM reverse mortgage, or nine to 14 times the size of the actual HECM market. The existence of a large number of seniors with an existing mortgage or taking out a new mortgage with quite high LTVs (57-65%, depending on the product) suggests that many seniors do, in fact utilize home equity in order to fund their retirement. Yet they choose products that require monthly payments lasting decades into retirement and rising as a share of (declining) income as they age. We consider a number of possible explanations for why seniors in the US do not spend home equity and rely on loans with high payments, including precautionary savings for health shocks, bequest motives, high costs of reverse mortgages, and the lack of brand name institutions in the reverse mortgage business.


The published version of this working paper may be found in the 2022 publication: New Models for Managing Longevity Risk: Public-Private Partnerships.


Reverse mortgage, home equity, borrowers, older adults, retirement

Working Paper Number



Mayer is also CEO of Longbridge Financial, a reverse mortgage lender.

Copyright/Permission Statement

All findings, interpretations, and conclusions of this paper represent the views of the author and not those of the Wharton School or the Pension Research Council. © 2020 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.


The authors wish to thank Michael McCully for helpful comments and data.

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Economics Commons



Date Posted: 15 September 2020