Japan Financial Services Agency Tightens Scrutiny of Ultra-Long Mortgages as Rates Rise

According to Jin10, Japan's Financial Services Agency is tightening scrutiny of ultra-long home loans issued by online banks and other lenders as the country's real estate market booms. Officials said 50-year mortgages are becoming increasingly common among younger borrowers with lower incomes, and that the agency is concerned rising interest rates or falling borrower incomes could create repayment risks. Japan's traditional maximum mortgage term has been 35 years, but more lenders, including SBI Shinsei Bank and Rakuten Bank, have begun offering home loans with terms of 40 years or even 50 years. Officials said regulators plan to step up monitoring and, if necessary, communicate directly with banks. Compared with traditional mortgages, buyers who choose 50-year floating-rate home loans face a longer period of risk that borrowing costs could rise to unaffordable levels. The Bank of Japan is expected to continue raising rates, which will pressure borrowers who judge affordability based on initially lower monthly payments.