"0.2%P Interest Rate Discount Per Child"... Japan's Mortgage Benefit Competition Amid 'Population Decline'

Interest Rate Reduction Based on Number of Children Focused on Local Finance
Preventing Young Families from Moving to Cities and Solving Low Birthrate Issues

As the Japanese government steps up measures to address the low birthrate, the financial sector has also begun offering mortgage loan products that reduce interest rates based on the number of children, drawing attention. Especially in regional banks where the issues of low birthrate and youth migration to cities are severe, this is being used as an incentive.

On the 27th, NHK reported that the Shiozawa Credit Union in Minamiuonuma City, Niigata Prefecture, decided to start offering mortgage loan products from next month that lower interest rates according to the number of children. The fixed interest rate set at 2.2% will be reduced by 0.05 percentage points per child, and this applies even if a child is born during the loan period. Here, discounts are applied for up to six children, allowing a total interest rate reduction of 0.3 percentage points. The loan period has also been significantly extended to a maximum of 51 years.

However, the scope of mortgage loans is limited to houses within Minamiuonuma City. This measure was created to prevent the low birthrate and promote the settlement of younger generations in the region, as the population of the city has decreased by more than 10% over the past decade.

In this way, regional financial institutions in Japan are competing to join such efforts for low birthrate and regional settlement. For example, Fukuoka Hibiki Credit Union applies an interest rate reduction of 0.1 percentage points per child only to households supporting two or more children aged 18 or older.

Kawanoe Credit Union in Shikokuchuo City, Ehime Prefecture, also offers a similar product. They sell a mortgage loan product called "Happy Family" as a childcare support measure. The interest rate is reduced by 0.2 percentage points per child, and additional reductions are provided if living with parents or grandparents. The bank explained, “If conditions are met, customers can receive up to a 1.50% preferential rate compared to the existing rate.”

Hokuriku Bank in Kanazawa City also offers an interest rate preferential treatment of 0.1 to 0.3 percentage points annually for those with one or more dependent children eligible for deductions when taking out a mortgage loan.

As regional financial institutions move to attract young families, the Japanese government also plans to expand national-level measures. The Kishida administration has set goals to expand childcare-friendly housing and strengthen housing support as part of its low birthrate countermeasures. The government will also implement support for multi-child households through the Japan Housing Finance Agency as a measure to reduce mortgage loan interest burdens for childcare generations.

First, for the mortgage loan product "Flat 35" offered by the Japan Housing Finance Agency, the interest rate reduction period will be extended from the current 5 years to 10 years when childcare households acquire housing. In addition, they are broadly considering measures such as ▲priority occupancy for childcare households in well-located public rental housing ▲creating residential environments where residents do not have to worry about noise caused by childcare ▲expanding the range of interest rate reductions based on the number of children.

Issei Onozawa, director of Shiozawa Credit Union, commented on the introduction of such mortgage loan products, saying, “The burden on the younger generation is increasing, but through support for childcare households, we want to help maintain the local population even a little as a financial institution,” and told NHK, “If industries turn their attention to childcare and children, the low birthrate phenomenon can be changed.”

This content was produced with the assistance of AI translation services.