Abstract
We examine the fitness of fixed-or adjustable-rate reverse mortgages(RM) programs for various gender-age groups of retirees in Taiwan. RM programs allowsenioror retirees to exchange their house equity fora stream of level cash flows to cover their living expenses. We use the Taiwan 2008 Life Expectancy Database and simulate house prices and interest rates to estimate the annuitiesand the maximum loan to value for different gender-age groups if either RM program is adopted. While accounting for the mortgage insurance premium structure, we evaluate each RM program based upon the monthly payments the senior receive and the total annual loan costs (TALC) they pay. The results show that the elders receive more monthly payments, and female over 90 years old receive more monthly payment than the male counterparts while the reverse is true if the female are below 90. The TALC (or monthly payments) of the adjustable-rate RM is lower (are higher) than the fixed-rate RM given the same gender-age group except for the female-95 group.