Image Credits: Reuters
In response to the rising cost of property, particularly in Tokyo’s competitive housing market, financial institutions are now offering specialized products designed to address the risks associated with pair loans. These loans, where two individuals co-borrow to purchase a home, are gaining traction due to their appeal amidst escalating real estate prices.
In July, Mizuho Bank launched a pioneering pair-loan group credit insurance product in collaboration with Dai-ichi Life Insurance Co. This new offering is designed to alleviate the burden of mortgage repayments in the event of a borrower’s death or if they are diagnosed with cancer. Under this insurance scheme, the outstanding mortgage balance is effectively cleared if one of the borrowers passes away, ensuring that the surviving partner is not left with the full debt.
This product represents a notable departure from traditional group credit life insurance, with an annual premium 0.2% higher than conventional options. Mizuho Bank’s Hiroshi Yui, head of the bank’s personal loan promotion department, emphasized the product’s potential to mitigate repayment anxiety for couples, stating, “We believe the product will eliminate repayment concerns for people in the event their partner dies.”
PayPay Bank has already introduced a similar insurance product through its online platform and smartphone app, while Resona Bank is set to launch its own pair-loan group credit life insurance in October, developed in partnership with Nippon Life Insurance Co.
The need for such products is underscored by the steep prices of newly built apartments in Tokyo, which average around ¥100 million. In 2023, 33.9% of new condominium buyers in the Tokyo metropolitan area opted for pair loans, the highest percentage recorded since surveys began in 2018.
Mika Kasamatsu, deputy editor-in-chief of Suumo, a real estate and housing information website operated by Recruit Co., predicts continued growth in the use of pair loans. She notes, “The use of pair loans will continue to increase, and more services will be provided to encourage their use.” This trend highlights a growing awareness among financial institutions of the need for tailored solutions to meet the evolving demands of the housing market.