Aged care solutions widened

The Ministry of Civil Affairs (MCA) announced on Friday that a pilot program allowing the elderly to pay nursing home expenses by mortgaging their homes is "just one approach" being considered in its plan to improve aged care.

The reverse mortgage model, which allows the elderly use their homes as collateral for bank loans to pay nursing home costs, aims to diversify solutions for elderly people struggling to meet care costs, the MCA said in a statement on its website.

Another proposal is for nursing homes to be sponsored by local communities, the ministry said.

The announcement follows media debate about new aged care schemes, some of which have sparked public outcry amid concern that the elderly will have no choice but to mortgage their homes.

The State Council proposed reverse mortgages as a solution in a circular on September 13. The scheme has long been popular in the US, however, in China it has been met with suspicion due to fears of unpredictable real estate policies.

"Public misinterpretation is understandable due to the rapidly aging population and media reports about a financial shortfall for the current pension fund system," said Li Zhanjun, director of E-House (China) R&D Institute.

China's population aged over 60 is expected to increase from 194 million in 2012 to 300 million in 2025, according to the State Council.

Li also noted that it would be difficult to popularize the reverse mortgage model partly because it could jeopardize children's inheritance of their parents' homes.

"Commercial banks would also be unlikely to act as guarantors due to financial risks," Li told the Global Times.

The reverse mortgage model has only lukewarm public support, with around 70 percent of 6,135 respondents rejecting the scheme in an online poll by property information portal focus.cn on Friday.

"Reverse mortgages are only suitable for a very small group of people," Zhu Fengbo, president of rest home company Beijing Sun Cities Group, told the Global Times Saturday.

Since homeowners in China only have a 70-year leasehold of their properties, "it is difficult to estimate the value of seniors' often old real estate," Zhu noted.