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Was the Expansion of Housing Credit in Japan Good or Bad?

Author

Listed:
  • Charles Yuji Horioka

    (Research Institute for Economics and Business Administration, Kobe University, Osaka University, Asian Growth Research Institute, and National Bureau of Economic Research, JAPAN)

  • Yoko Niimi

    (Faculty of Policy Studies, Doshisha University, and Asian Growth Research Institute, JAPAN)

Abstract
This paper shows, using data from the Family Income and Expenditure Survey, that housing credit has become increasingly available over time in Japan, especially since 2000, and that this has made it easier for Japanese households to purchase housing and enabled them to do so at an earlier age. However, it also shows that the greater availability of housing credit has increased households' housing loan repayment burden, which has resulted in their cutting back on their other consumption expenditures and created the potential for retirement insecurity. Another concern is that the increasing availability of housing credit has been accompanied by a pronounced shift from fixed-rate to variablerate housing loans. This is cause for concern given the low level of financial literacy that prevails among the Japanese population and the likelihood that interest rates on variablerate housing loans will be raised sooner or later as monetary policy is tightened.

Suggested Citation

  • Charles Yuji Horioka & Yoko Niimi, 2020. "Was the Expansion of Housing Credit in Japan Good or Bad?," Discussion Paper Series DP2020-02, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:dp2020-02
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2020-02.pdf
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    References listed on IDEAS

    as
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    6. Sanders, Anthony, 2008. "The subprime crisis and its role in the financial crisis," Journal of Housing Economics, Elsevier, vol. 17(4), pages 254-261, December.
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    9. Charles Yuji Horioka, 2012. "Are Japanese Households Financially Healthy, and If So, Why? A Group of Seven (G7) Comparison," ISER Discussion Paper 0859, Institute of Social and Economic Research, Osaka University.
    10. Yuji Horioka, Charles & Niimi, Yoko, 2019. "Household Debt and Aging in Japan," AGI Working Paper Series 2019-12, Asian Growth Research Institute.
    11. R. Christopher Whalen, 2008. "The Subprime Crisis - Cause, Effect and Consequences," NFI Policy Briefs 2008-PB-04, Indiana State University, Scott College of Business, Networks Financial Institute.
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    Cited by:

    1. Yuji Horioka, Charles & Niimi, Yoko, 2019. "Household Debt and Aging in Japan," AGI Working Paper Series 2019-12, Asian Growth Research Institute.
    2. Charles Yuji Horioka, 2021. "Is the selfish life-cycle model more applicable in Japan and, if so, why? A literature survey," Review of Economics of the Household, Springer, vol. 19(1), pages 157-187, March.
    3. Charles Yuji Horioka, 2024. "Household Saving in Japan: The Past, Present, and Future," ISER Discussion Paper 1264, Institute of Social and Economic Research, Osaka University.
    4. Niizeki, Takeshi & Suga, Fumihiko, 2021. "The impact of the rise and collapse of Japan's housing price bubble on households’ lifetime utility," Journal of the Japanese and International Economies, Elsevier, vol. 60(C).

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    More about this item

    Keywords

    Homeownership; Housing credit; Housing loans; Mortgages; Household debt; Household liabilities;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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