Household behavior of mortgage choice and homeownership in Japan

2013 Fiscal Year Final Research Report

• Project/Area Number: 23530257
• Research Category: Grant-in-Aid for Scientific Research (C)
• Allocation Type: Multi-year Fund
• Section: 一般
• Research Field: Economic statistics
• Research Institution: Kanagawa University
• Principal Investigator: MORIIZUMI Yoko 神奈川大学, 経済学部, 教授 (20166383)
• Co-Investigator(Renkei-kenkyūsha): NAOI Michio 慶応義塾大学, 経済学部, 准教授 (70365477)
• Research Collaborator: YUKUTAKE Norifumi (公益財団法人)日本住宅総合センター, 主任研究員 ; TIWARI Piyush University of Melbourne, Australia, Faculty of Architecture, Building and Planning, Associate Professor
• Project Period (FY): 2011 – 2013
• Keywords: 経済統計学 / 住宅金融 / 住宅経済

Research Abstract

Although mortgage rates are historically low and those spreads among instruments are small in Japan, share of Adjustable Rate Mortgage (ARM) is sharply increasing after the financial crisis. From an economic policy perspective it is important to know whether a risky (easily defaulted) borrower selects ARM. Previous studies focused on mortgage rates and their spread,which cannot explain mortgage choice of Japanese borrowers.Besides these we introduce income and unemployment risks into mortgage choice model. The estimated result suggests that risky borrowers are inclined to select ARM.
After the bubble burst housing prices declined due to a prolonged doldrums,which implies housing assets become risky ones.The housing asset effect on consumption is estimated using panel data.The results exhibit that housing asset has almost the same effect as financial one. Housing asset has an asymmetric effect of rise and fall in prices, where the former is smaller than the latter.

Research Products

• [Presentation] Income Risk and Mortgage Choice among Japanese Households (2012)
  • Author(s): Naoi, M., Y.Moriizumi and N. Yukutake
  • Organizer: Asian Real Estate Society and Urban Economic Association–American Real Estate, Joint International Conference
  • Place of Presentation: Singapore
  • Year and Date: 2012-07-05
• [Presentation] Optimal Consumption and Portfolio Choice in the Presence of Housing : Evidence from Japanese Household-level Data (2012)
  • Author(s): Naoi. M., and Y. Moriizumi
  • Organizer: European Network for Housing Research- Housing Economics Working Group Meeting
  • Place of Presentation: Vienna, Australia
  • Year and Date: 2012-02-19
• [Book] Unemployment Risk, Homeownership and Housing Wealth : Lessons from Bubble Aftermath in Japan", Chapter 4 In C. Jones, M. White and N. Dune edit., Challenges of the Housing Economy : An International Perspective (2012)
  • Author(s): Moriizumi, Y., and M. Naoi
  • Total Pages: 316 (58-89)
  • Publisher: Wiley and Blackwell, UK
• [Remarks] Moriizumi, Y."Overview of Housing and Mortgage Markets in Japan", Discussion Paper No.2013-06, Kanagawa University Economic Society, 2014, March, 1-14.
• [Remarks] Naoi, M., Y.Moriizumi and N. Yukutake."Income Risk and Mortgage Choice among Japanese Households", SSRN WP 130204,2013 February 4, 1-26.