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How profitable are Equity Release Mortgages?

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  • Buckner, Dean
  • Dowd, Kevin

Abstract

We obtain valuations of UK Equity Release Mortgages under the ‘market consistent’ approach consistent with conventional option pricing and the ‘discounted projection’ approach used by the industry. Projections of the expected profitability of these products have significant commercial implications.

Suggested Citation

  • Buckner, Dean & Dowd, Kevin, 2020. "How profitable are Equity Release Mortgages?," Economics Letters, Elsevier, vol. 197(C).
    • Handle: RePEc:eee:ecolet:v:197:y:2020:i:c:s0165176520304110
    DOI: 10.1016/j.econlet.2020.109651
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    References listed on IDEAS

    as
    1. Dowd, Kevin & Buckner, Dean & Blake, David & Fry, John, 2019. "The valuation of no-negative equity guarantees and equity release mortgages," Economics Letters, Elsevier, vol. 184(C).
    2. Johnny Siu‐Hang Li & Mary R. Hardy & Ken Seng Tan, 2010. "On Pricing and Hedging the No‐Negative‐Equity Guarantee in Equity Release Mechanisms," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 77(2), pages 499-522, June.
    3. Andrew Cairns & David Blake & Kevin Dowd & Guy Coughlan & David Epstein & Alen Ong & Igor Balevich, 2009. "A Quantitative Comparison of Stochastic Mortality Models Using Data From England and Wales and the United States," North American Actuarial Journal, Taylor & Francis Journals, vol. 13(1), pages 1-35.
    4. Hosty, G. M. & Groves, S. J. & Murray, C. A. & Shah, M., 2008. "Pricing and Risk Capital in the Equity Release Market," British Actuarial Journal, Cambridge University Press, vol. 14(1), pages 41-91, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Equity Release; Market consistent approach; Discounted projection approach;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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