The 100-year Japanese residential mortgage: An examination

The 100-year Japanese residential mortgage: An examination Article

Chang, CH, Dandapani, K, Auster, R. (1995). The 100-year Japanese residential mortgage: An examination . 4(1), 13-26. 10.1016/1061-9518(95)90004-7

A recent innovation in the Japanese real estate industry to promote home ownership is the creation of a 100-year mortgage term. The home, encumbered by the mortgage, becomes an ancestral property and is passed on from grandparent to grandchild in a multigenerational fashion. We analyze the implications of this innovative practice, contrast it with the conventional 30-year mortgage popular in Western nations and explore its unique benefits and limitations within the Japanese economic and cultural framework. Through the use of simulation, the conclusion is reached that the 100-year mortgage has failed to increase the affordability of homes. Instead, affluent homeowners are more likely to employ long-term mortgages as an estate-planning tool to reduce inheritance taxes. © 1995.