Low Demand for Reverse Mortgages in Canada: Price, Knowledge or Preferences?

Ismaël Choinière Crèvecoeur and Pierre-Carl Michaud
Working Paper #21-07
Research Chair in Intergenerational Economics – September 2021
In this paper, the authors investigate three possible causes of the low demand for reverse mortgages in Canada. To do so, they build a model to calculate and compare the costs of guarantees built into reverse mortgage products. They also conduct a stated-preference experiment with 3000 Canadians to determine whether Canadians understand reverse mortgages and whether low demand originates on the preference side. The results suggest that consumers are somewhat price sensitive in addition to demonstrating little knowledge of these products and low demand overall.