Reverse mortgages, like other services for seniors, are part of the silver economy. What economic and political environment will shape the market in 2025? On one hand, we face a change in the U.S. presidency and potentially the end of the war in Ukraine, which could boost capital and investment markets. On the other hand, the presidential elections in Poland may generate internal tensions and deepen societal polarization. Such an environment will not be conducive to implementing new reforms, including regulations for reverse mortgages, which the market is waiting for. Additionally, Poland will continue to grapple with constant issues: an aging population, low pensions, and senior debt. Furthermore, the value of real estate owned by retirees has already surged due to rising property prices. In 2025, will seniors be willing to unlock PLN 1.5 trillion frozen in real estate through reverse mortgages? Robert Majkowski, President of the DOM Mortgage Fund, offers his forecast for the upcoming year.
1. International Developments May Boost Sentiment
2025 is shaping up to be a year of significant changes on the international stage. Most decision-makers and analysts expect the war in Ukraine to end soon after a new U.S. president takes office. For Poland, as a country neighboring the conflict zone, geopolitical stabilization would mean reduced risk and improved investment and economic sentiment. This, in turn, could stabilize the financial market. According to a World Bank report, the war in Ukraine reduced the economic growth rate in Central and Eastern Europe by about 1.5 percentage points in 2023. Its end could lead to GDP growth in Poland of up to 4%, compared to the 2.5% forecast under conditions of ongoing conflict.[1] For the reverse mortgage market, which is closely tied to consumer sentiment, this is significant. Moreover, political stability increases trust in various financial instruments and may boost confidence and willingness to adopt new solutions, such as reverse mortgages.
2. Political Instability in Poland Will Hinder New Reforms
Poland’s 2025 presidential elections will be a pivotal political event. The outcome is still uncertain, which unfortunately signals intensifying internal conflicts and societal polarization. In such conditions, it will be difficult for the government to introduce new solutions or reforms important to society. One of these is legislation on lifetime annuity payments dedicated to the reverse mortgage industry and seniors. Political instability hinders political dialogue and increases consumer uncertainty. It is likely that in 2025, the professional sector offering lifetime annuities will still have to push for market regulation.
3. Stabilizing Inflation Will Boost Seniors’ Purchasing Power but Not Eliminate Debt
Inflation should increasingly be under the control of central banks and is expected to approach target levels in Poland. This means we are unlikely to see the dramatic price increases experienced in the past two years. The National Bank of Poland predicts inflation will decline to 5-6% in 2025, a significant improvement from the 10% recorded in 2023. A decrease in inflation will strengthen seniors’ purchasing power. However, this group is so burdened with debt that demand for reverse mortgage offerings will not diminish. Over 60% of seniors who opt for reverse mortgages do so to repay debt and other financial obligations. According to the latest data from the National Debt Register, Polish seniors’ debt amounted to PLN 5.9 billion in 2024, with approximately 330,000 retirees in debt.
4. The Value of Seniors’ Assets Eligible for Reverse Mortgages Continues to Rise
In the reverse mortgage market, both in Poland and Europe, no breakthrough is expected—rather a continued evolution and steady growth in popularity of this solution. It is worth noting that Polish seniors own significant wealth locked in real estate. Estimates suggest that about 80% of retirees own a house or apartment. The estimated value of real estate held by seniors exceeds PLN 1.5 trillion. This means these frozen assets could be unlocked through lifetime annuities. Additionally, rising property prices (which increased by as much as 11% annually in 2023) further boost the value of seniors’ assets.
5. The Growth of the Silver Economy Also Supports Reverse Mortgages
Polish society, like the rest of Europe, continues to age. According to the Central Statistical Office (GUS), at the end of 2024, there were 7.8 million people aged 65 and over, making up 21% of the population. Forecasts indicate that by the end of 2025, the number of people aged 55 and over will increase to 12.2 million, about one-third of the population. The growing number of seniors will drive demand for services and products dedicated to this demographic, fueling the silver economy. Its role will continue to grow each year, and it is already a permanent feature of the economic landscape. This trend will also contribute to the development of mortgage fund offerings. Faced with low pensions and limited systemic support, seniors will seek additional sources of income.
[1] https://businessinsider.com.pl/gospodarka/oto-prognozy-ekf-na-2025-r-koniec-roku-ma-przyniesc-ulge/143rx5j
Source: https://ceo.com.pl/prognoza-na-2025-rok-dotyczaca-rynku-hipoteki-odwroconej-64610
