An investigation into the readiness of the Zimbabwe financial institutions to the establishment of Reverse Mortgages as a financial vehicle for the aged
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This research is about the readiness of the Zimbabwe financial institutions to the establishment of a reverse mortgage market in Zimbabwe. There are many pensioners who are earning very little in terms of pension and are struggling to make ends meet and yet own residential properties that they could have acquired during their working years. In other words such individuals are asset rich but cash poor. Reverse mortgaging allows senior citizens to avail themselves of funds by mortgaging their residential property without them having to move out of the properties. Following the hyper inflationary period of 2007 to 2009, homeowners were left debt free as they were able to pay off for their properties at very low prices. This then has created an opportune time to establish the reverse mortgage market. The research thus seeks to find out the conditions that are necessary for reverse mortgages to operate, the factors that affect the market as well as the challenges that hinder the growth of that market. Literature review looked at how reverse mortgage market has been operational in other countries. In The United States of America reverse mortgages started in the 1970s, in Australia it started in the 1990s, in United Kingdom it has been operational since 1993 while in India it was established in 2007. South Africa is the only African country to have offered reverse mortgages with the first deals happening in 2010. This is a quantitative research. The researcher carried out a survey on all 16 financial institutions through the administration of 10 questionnaires per institution. Data from the research was processed using SPSS, analyzed and discussed before drawing conclusions. Findings show that the main condition has to do with willingness and ability of stakeholders, that is, employees and shareholders. The major factors were to do with those factors that pose financial risk to the consumer, namely, confidence in the market, tax issues, property prices and issues of indebtedness. The main challenge was the currency issue as a result of the possible return of the Zimbabwe at some point, while the other challenges proved to be statistically insignificant.