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

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  • Charles Yuji Horioka
  • Yoko Niimi

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 variable-rate 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 variable-rate 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?," ISER Discussion Paper 1075, Institute of Social and Economic Research, Osaka University.
    • Handle: RePEc:dpr:wpaper:1075
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    File URL: https://www.iser.osaka-u.ac.jp/library/dp/2020/DP1075.pdf
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    References listed on IDEAS

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    1. Yukutake, Norifumi & Iwata, Shinichiro & Idee, Takako, 2015. "Strategic interaction between inter vivos gifts and housing acquisition," Journal of the Japanese and International Economies, Elsevier, vol. 35(C), pages 62-77.
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    6. 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.
    7. 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.
    8. Yoko Niimi, 2016. "The “Costs” of informal care: an analysis of the impact of elderly care on caregivers’ subjective well-being in Japan," Review of Economics of the Household, Springer, vol. 14(4), pages 779-810, December.
    9. Xu, Hangtian & Zhou, Yiming, 2019. "Public housing provision and housing vacancies in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 53(C), pages 1-1.
    10. Charles Yuji Horioka & Yoko Niimi, 2019. "Household Debt and Aging in Japan," ISER Discussion Paper 1068, Institute of Social and Economic Research, Osaka University.
    11. Karen E Dynan & Donald L Kohn, 2007. "The Rise in US Household Indebtedness: Causes and Consequences," RBA Annual Conference Volume (Discontinued), in: Christopher Kent & Jeremy Lawson (ed.),The Structure and Resilience of the Financial System, Reserve Bank of Australia.
    12. Nemoto, Hiroyuki, 2017. "Credit availability and asset price: Empirical analysis of the Japanese bubbles in 1980s," Journal of the Japanese and International Economies, Elsevier, vol. 44(C), pages 90-98.
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    Cited by:

    1. Charles Yuji Horioka & Yoko Niimi, 2019. "Household Debt and Aging in Japan," ISER Discussion Paper 1068, Institute of Social and Economic Research, Osaka University.
    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. 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

    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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