Japan's FSA to Step Up Monitoring of Ultra-Long-Term Mortgages as Rates Rise, Citing Consumer Protection
RegulationMacro
Japan's Financial Services Agency on the 15th unveiled its financial administration policy, setting out priority measures for the year through June 2027. Citing the growing use of ultra-long-term mortgages amid rising interest rates and soaring housing prices, the agency said it will carefully monitor financial institutions from the standpoint of protecting consumers. As younger borrowers in particular increasingly take out mortgages with repayment periods of roughly 40 to 50 years to ease their monthly repayment burden, the agency will inspect lenders' screening systems to determine whether loans are being extended beyond borrowers' repayment capacity relative to their expected income. It will also scrutinize how rising interest rates affect financial institutions' deposits and lending, and will focus on confirming whether risk management is adequate for loans to overseas funds and data centers. On misconduct at financial institutions, the agency stressed that it will not attribute problems to the actions of individuals but will analyze root causes, including the stance of management and organizational culture. In particular, regarding the spate of money theft by employees in the life insurance industry, it stated that it will take strict administrative action, including on-site inspections, as necessary.
