New Delhi: The market for reverse mortgage services, under which senior citizens can pledge their property for a steady income, will have a potential of $113 billion in India by 2015, nearly triple of the about $39 billion now, according to a report on ‘Reverse Mortgage Market: Early Days for India’ released by global consultancy firm, Celent.
The reverse mortgage market potential, calculated by the number of senior citizens, establish that the current market size for the product is three million households and would grow to six million by 2015.
The report points out that the home equity available is $39 billion and is expected to grow to $113 billion by 2015, which would be a significant opportunity for lenders.
The reverse mortgage market is expected to grow owing to the rapid growth in the senior citizen population, driven by lower fertility rates, improved healthcare and better nutrition.
The Indian government is now employing innovative strategies towards change and it has begun introducing financial instruments aimed at the senior population.
In the Budget proposals for 2008-09, the Finance Minister announced that the reverse mortgage would not amount to transfer and the stream of revenue received by the senior citizen would not be income.
The senior citizen population is estimated to become 117 million by 2015, growing from the current 87 million. “There is great potential for this market,a but it requires the building of an ecosystem that would make the product more viable for lenders in an Indian context,” Celent analyst and author of the report Ravi Nawal said.