Prospects for the Development of Equity Release Products in Poland – Reverse Mortgage from a Cultural Perspective

At the time of crisis, which involves state funded benefits as well as an increase in public debt, the members of the European Union are forced to consolidate their budgetary expenses. The social cost, however, is extremely high, as the general public is unwilling to accept it. Demographic experts predict a decrease in the amount of people at an economically productive age, not to mention the continuously growing life expectancy. This fact will have serious economic consequences in Poland. That is why the pension system reform was initiated. The inevitable cuts in spending on welfare benefits might cause a situation in which one of the possibilities of increasing retirement benefits leads to the use of the most valuable and long-lasting assets that can be found in households - real estate. A financial instrument called reverse mortgage enables the gradual liberalization of the value of real estate and, thereby, can be used as an additional source of retirement income.

In Poland, the lack of verification by the Polish Financial Supervision Authority and legislative regulations as far as contractors and consumers are concerned, may pose a potential risk. There are two main problems, namely, the legal status of companies that offer reverse mortgages (in the case of possible bankruptcy and debt vindication) as well as issues concerning cyclic value changes on real estate markets. Because of the lack of a reverse mortgage bill, there is no institution which can control the financial situation of contractors, thereby guaranteeing the safety of potential customers.

The goal of this article is to determine the prospects of the development of reverse mortgage in Poland from a cultural perspective in terms of potential client preferences by carrying out a survey among people aged 18 to 30 (mostly students from different cities) and senior citizens over the age of 60. The other aim is to assess the influence of cultural determinants on the perception of equity release products. The author poses a question: In what way does ownership and inheritance attitude influence the volume of reverse mortgage sales?