Reverse Mortgages: Learning from Italy's Renewed Framework

The objective of this paper is to investigate the role that reverse mortgages can play in meeting widely shared challenges, such as the combination of an aging population and low birth rates. While this mix seems detrimental to the sustainability of today’s pension schemes in many countries, these loans may be usefully resorted to as lifetime income planning tools. In Italy rules were introduced in 2015 that promise to favor a more massive adoption of the so-called prestito vitalizio ipotecario; this renewed framework may induce 60+ homeowners to reconsider their residential property, not only to satisfy their housing needs, but also to achieve higher standards of living. Therefore, more attention should be paid to total wealth management rather than focusing on the trade-off between financial and real assets. The analysis is based upon reverse mortgage products that have been recently launched by major banks within this evolutionary scenario: Banca Popolare di Sondrio, Deutsche Bank S.p.A., Intesa Sanpaolo S.p.A., Monte dei Paschi di Siena S.p.A. and UniCredit S.p.A.. Conclusions can be useful elsewhere, as they imply that decisions on managing assets – including housing equity – should be supported by adequate consumer financial protection, as well as by qualified and independent counseling.