Japan’s financial regulator is intensifying its oversight of ultra-long mortgage lending as the country’s housing market experiences rapid price increases. Financial Services Agency (FSA) officials have expressed concern about the growing prevalence of home loans extending up to 50 years, particularly among younger borrowers with limited incomes.

Traditionally, mortgage repayments in Japan have spanned up to 35 years. However, several lenders including SBI Shinsei Bank and Rakuten Bank have recently introduced loan products with repayment periods of 40 to 50 years. These extended terms enable borrowers to reduce their monthly payments by spreading costs over a longer timeframe, making homeownership more accessible despite rising property prices.

The FSA official, speaking on condition of anonymity due to the sensitive nature of the matter, highlighted the risks associated with these ultralong mortgages. One key concern is the heightened exposure to increasing interest rates, as many of these loans come with floating-rate terms. With the Bank of Japan expected to continue raising rates, borrowers may face significant payment increases that could strain their financial capacity, especially if their income growth does not keep pace.

Additionally, the slower accumulation of home equity presents another risk. Since borrowers maintain a higher principal balance for a longer period, they are more vulnerable to negative equity if property prices fall, potentially leaving them unable to cover the outstanding debt upon selling the property.

The FSA also noted worries about lending structures such as “pair loans,” where couples combine their borrowing capacity to finance a home. This arrangement, along with ultralong mortgages, may encourage some households to undertake debt levels that exceed their repayment ability amid escalating housing costs.

To address these challenges, the FSA plans to strengthen its monitoring of lenders offering these products and engage directly with financial institutions if necessary. The agency declined to provide a formal statement.

As Japan’s housing market continues to evolve, regulators are focusing on balancing expanded access to home financing with the need to ensure borrowers do not assume unsustainable debt burdens over extended loan terms.