2025 Japan reverse mortgage demand softens as all-time applications top ten thousand

Adam German
1 day ago
3 min read

The Japan Housing Finance Agency (JHF) announced on May 29th that fiscal 2025 usage of Reverse 60, its reverse-mortgage-type housing loan for older borrowers, declined year on year, even as all-time applications surpassed 10,000 for the first time since product launch.

FY2025 covers the period from April 2025 until the end of March 2026.

How Reverse 60 Works

Reverse 60 is offered by private financial institutions in partnership with the JHF. It is designed mainly for borrowers aged 60 and older who want to access housing wealth without taking on a conventional principal-and-interest mortgage.

Elderly Japanese couple enjoying the Ueno Park scenery.

Photo by Mark Novak on Unsplash

For older homeowners, the product can provide a way to use home equity for retirement-age housing needs, such as renovating an aging home, relocating, or refinancing an existing mortgage.

Monthly payments are limited to interest, helping reduce cash-flow pressure in retirement.

The principal is repaid after the borrower passes away, either by heirs or through the sale of the collateral property.

In some cases, Reverse 60 can also support a move into senior-oriented housing without requiring an immediate sale of the home the borrower is leaving.

The former home can serve as collateral, with the borrower making interest-only payments during their lifetime.

What Non-Recourse Means

Non-recourse loans accounted for 99.8 percent of Reverse 60 usage in fiscal 2025.

Under this structure, if the collateral property is sold after the borrower passes away and the sale proceeds are not enough to cover the remaining debt, the borrower’s heirs are not required to repay the shortfall.

Under a recourse structure, by contrast, heirs may be required to repay any remaining balance.

Fiscal 2025 Reverse 60 Usage

In fiscal 2025, Reverse 60 usage declined from the previous fiscal year:

Applications totaled 1,293, down 12.9 percent.
Loans executed totaled 1,225, down 5.6 percent.
Total loan amount fell 5.9 percent to JPY 19.59 billion.
The number of financial institutions handling Reverse 60 rose by one to 89 nationwide.

By the end of fiscal 2025, cumulative usage had reached:

10,696 applications.
Approximately JPY 169.5 billion in cumulative application value.

By rate type:

Variable-rate and fixed-rate-period selection products remained the main category, with 1,173 applications, 1,160 loans executed and JPY 18.65 billion in loans.
A full-period fixed-rate type, introduced on January 6, 2025, recorded 120 applications, 65 loans executed and JPY 940 million in loans during fiscal 2025.

Borrower Profile

The average Reverse 60 applicant in fiscal 2025 was 70.1 years old and had annual income of JPY 4.04 million.

By applicant type:

Pensioners accounted for 58.4 percent.
Company employees accounted for 19.7 percent.
Part-time or casual workers accounted for 5.6 percent.
Company executives accounted for 4.9 percent.
Self-employed applicants accounted for 4.8 percent.

The average financing plan was:

Required project amount: JPY 30.66 million.
Loan amount: JPY 15.61 million.
Monthly payment: JPY 46,000.

Use of Funds and Regional Trends

Single-family home renovations were the largest use of funds in fiscal 2025.

By use of funds:

Single-family home (SFH) renovations accounted for 28.2 percent.
New SFH accounted for 27.5 percent.
Newly built condos accounted for 18.4 percent.
Refinancing accounted for 15.3 percent.
Existing condos accounted for 6.8 percent.

Compared with fiscal 2024:

The share of single-family home renovation use rose by 4 percentage points.
The share for New SFH fell by 6 percentage points.

The data suggest more older homeowners are using housing wealth to repair or improve existing homes rather than only to fund new construction.

By region:

Kanagawa Prefecture accounted for the largest share of applications at 13.1 percent.
Tokyo followed at 9.9 percent.
Chiba Prefecture accounted for 7.4 percent.

The Tokyo area’s share rose by 4 percentage points from the previous fiscal year, while regional areas outside the three major metropolitan areas and four major regional cities declined by 4 percentage points.

The most common reason for needing housing funds or a housing loan was that the applicant’s home was old.

By reason:

Aging home: 49.2 percent.
Refinancing: 14.0 percent.
Relocation: 10.4 percent.
Senior-oriented condominiums: 8.7 percent.

Source:

R.E. Port News (Japanese only)