Analysis on the Demand of Reverse Mortgage Based on Borrowers´ Expectation

China´s old-age security system is facing more and more serious challenge from aging population. So it is important to study the feasibility of implementing the reverse mortgage (RM) business in China. This paper compares two types of RM pricing models (non-redeemable RM and redeemable RM), under taking account of borrowers´ uncertain expectation. Through theoretical analysis and empirical simulating results, we believe that because of borrowers´ strong tendency of heritage motivation, and unstable expectation on life expectancy or house value´s volatility, non-redeemable RM with endogenous instability is not suitable for implementation in China, which can explain the failures of some tries similar to non-redeemable RM in China recently.