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Reverse Mortgages

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Mizuho has begun to offer reverse mortgages that open the door for customers to draw on the asset value of their homes and enter a more–affluent next stage in their lives.

As the average lifespan of the Japanese people lengthens, concerns in society about funds for the elderly have become greater. Mizuho is aware that the role of financial institutions in helping seniors live with peace of mind is becoming more important. Based on this awareness, MHBK is working to develop and offer attractive financial products and services that meet customer needs in their later years.

One of these products is Mizuho Reverse Mortgages (which are nicknamed "Mizuho Prime Age") (hereinafter, this loan product). Under reverse mortgage arrangements, which Mizuho introduced in July 2013, elderly customers use their homes (their own residences) as collateral and use this loan product to drawn down borrowings within a specified limit. Customers are free to use the proceeds of the loan in any way they wish. For example, they may use the loan to pay expenses related to living a more–fulfilling second life, including expenditures on hobbies and travel as well as renovating their current home or to pay the costs of entering a retirement home. In addition, since repayments are made in a lump sum after the customer has passed away and their residences have been sold; in principle, it is unnecessary for customers to repay their loans or pay interest during the term of the loan.

In the United States, supported in part by contributions from government measures, the risks private financial institutions bear under these arrangements, related to the possibility that the value of homes put up as collateral may decline and risks related to loan securitization arrangement, are reduced, and reverse mortgages are in wide use. However, in Japan, frameworks to lessen risk had not been sufficient, and only a few financial institutions offered this product.

However, in recent years, as a result of discussions in the Public–Private Financial Roundtable* and in other venues, regarding related topics, including the proper nature of financial products and services to meet the needs of the elderly and methods of promoting the development of and making greater use of the market for used housing, reverse mortgages have been recognized as a promising financial product. In view of these background developments, MHBK gave full consideration to the risks that customers who make use of this loan product and banks are exposed to and became the first of Japan's megabanks to offer this loan product. Going forward, in collaboration with MHTB, making use of this loan product, MHBK will respond to the broad range of needs of elderly customers through helping them to make use of the asset value of their homes and the sale of their residences.

In addition, MHBK is working to raise awareness of this loan product through collaboration with other companies providing related products and services. These have included a tie–up with Benesse Style Care Co., Ltd., which is Japan's largest operator of paid homes for the elderly in October 2013. This was followed in April 2014 by a tie–up with Alsok Co., Ltd., which is a leading real estate administration and management company, and then in June 2014 by an alliance with Taisei–Yuraku Real Estate Sales Co., Ltd., which is one of Japan's major real estate agents. Through offering these loan products and peripheral services through tie–up partner companies, MHBK is working proactively to meet the increasingly diverse needs of its customers.

  • *Public–Private Financial Roundtable: Following the issuance of a report of The Japanese Financial Industry: Desirable State in the Medium– and Long–Term (Present State and Future Outlook) published by the Working Group on the Medium– and Long–Term Modalities of the Japanese Financial Industry, which was created in the Financial System Council, interests in the public and private sectors set up this roundtable as a sub–committee with the aim of improving and revitalizing Japan's financial services industry on an ongoing basis.

Photo

Poster of Mizuho Prime Age

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