Flat 35 mortgage applications fall in 2024 but rebound in 1Q 2025

Adam German
May 7
2 min read

The Japan Housing Finance Support Agency released two separate reports last week, one on May 1 and the other on May 2, detailing recent trends in Flat 35 mortgage applications and interest rates for 2024 and the first quarter of 2025.

All percentage below are year-on-year (YoY) comparisons, in other words this period compared to the same period last year.

Loan Applications and Disbursements Decline in 2024

According to the May 2 announcement, the total number of Flat 35 loan applications in fiscal 2024 was 40,442, a slight year-on-year decline of 0.8%.

Actual disbursements dropped more sharply to 27,918 units (down 15.7%), with the total loan amount falling to ¥882.8 billion, a 17.1% decrease.

Breakdown by Loan Type

Purchase-based loans (買取型):

This is the primary format used in the Flat 35 scheme. Under this model, private financial institutions originate the loans and then sell them to the Japan Housing Finance Agency (JHF), which assumes the credit and interest rate risk.

Because the loans are ultimately held by the JHF, this structure ensures access to long-term, fixed-rate financing backed by a government-affiliated institution.

Borrowers benefit from stable rates and standardized conditions, while lenders reduce their long-term exposure.

In 2024, applications under this type totaled 35,857 (down 1.4%), disbursements reached 24,975 (down 14.6%), and the total loan value fell to ¥786.3 billion (down 16.3%).

Guarantee-based loans (保証型):

Introduced as a more flexible option, this format allows private lenders to keep the loans on their books while receiving a credit guarantee, like an insurance, from the JHF.

The JHF covers a portion of the credit risk, encouraging financial institutions to offer Flat 35 terms while retaining the customer relationship and servicing rights.

This model may offer lenders more discretion in underwriting, but it is less widely used than the above purchase-based type.

In 2024, applications rose to 4,585 (up 4.2%), but actual disbursements declined to 2,943 (down 23.8%), and the total loan amount dropped to ¥96.6 billion (down 22.6%).

Strong Rebound in Q1 2025

In contrast, the first quarter of fiscal 2025 (January to March) showed strong growth in both loan types:

Purchase-based: Applications increased to 9,192 units (up 14.1% year-on-year), disbursements to 6,564 (up 1.3%), and loan value to ¥214.2 billion (up 2.3%).

Guarantee-based: Applications surged to 1,326 (up 39.7%), with 870 disbursements (up 12.5%) and a loan value of ¥28.8 billion (up 10.5%).

May 2025 Interest Rates Edge Downward

In its May 1 report, the agency announced that interest rates for Flat 35 loans offered by partner financial institutions will decrease slightly in May 2025.

For loans covering up to 90% of the property price:

21 Years Plus Loans: Rates will range from 1.820% to 3.860%, with the most frequently offered rate at 1.820%, down 0.120 percentage points from the previous month.

This marks the first rate drop in eight months.

20 Years or Less Loans: Rates will range from 1.430% to 3.470%, with a modal rate of 1.430%, also down 0.120 points.