In response to the soaring property prices in Tokyo, financial institutions have introduced a unique product aimed at easing the financial burden of housing loans. This product ensures that if one member of a couple who has jointly taken out a loan passes away, the balance of the loan will be reduced to zero.
Mizuho Bank took the lead in July by launching a pair-loan group credit insurance product, which was developed by Dai-ichi Life Insurance Co. The purpose of this product is to eliminate the mortgage balance for couples if one spouse dies or is diagnosed with cancer after taking out a joint loan.
Traditionally, group credit life insurance schemes cover housing loan balances when policyholders are unable to make mortgage payments. However, this new product has an annual insurance premium that is slightly higher than conventional group credit life insurance products by 0.2%. Mizuho Bank claims that this is the first time a major bank has offered such a product.
Hiroshi Yui, head of Mizuho Bank’s personal loan promotion department, expressed confidence in the effectiveness of this new offering. He stated that they believe it will alleviate repayment concerns for individuals in case their partner passes away.
PayPay Bank and Resona Bank are also joining in on providing similar products. PayPay Bank already offers a comparable housing loan option while Resona Bank plans to introduce its own pair-loan group credit life insurance product in October, developed by Nippon Life Insurance Co.
According to Recruit Co., the average sale price of newly built apartments in Tokyo’s 23 wards stands at around ¥100 million. In 2023, 33.9% of buyers opted for pair loans when purchasing new condominiums in the Tokyo metropolitan area – marking an all-time high since surveys began tracking this data back in 2018.
Mika Kasamatsu from Suumo (Recruit’s real estate and housing information website) predicts that there will be continued growth in pair loans usage and expects more services to be introduced to encourage their adoption. This trend towards joint borrowing is driven by escalating property costs and innovative financial solutions provided by banks.
