GE Consumer Finance, General Electric's Japanese subsidiary, will next month launch a housing loan business in an attempt to capitalise on growing demand. The company, which manages a consumer lending operation and a credit card unit, will open home lending offices in seven Japanese cities, including Tokyo. It plans to tap into its database of 5m customers to evaluate borrowers' creditworthiness. "GE has extensive know-how in risk management from our consumer finance business," said a GE spokesman in Tokyo. "We can apply these capabilities to the new home lending unit."
The company said it planned to extend mortgages to applicants who may have been turned away by traditional banks. GE could extend loans at a premium for individuals with higher credit risk, whereas Japanese banks apply almost the same rate for all borrowers. GE, which has consumer financing units in the US, Europe and Asia, established a home lending business in Hong Kong in 2000. Its move in Japan, to be officially announced near the end of this month, comes at a time when banks are expanding their home lending units amid solid demand helped by low interest rates and a demographic shift. "Banks are trying to grow their housing loan business as default rates tend to be lower," said Ned Akov, bank analyst at Macquarie in Tokyo. "They are less risk-weighted than ordinary loans and therefore more capital efficient."
GE said lending rates could be adjusted to reflect a borrower's creditworthiness, and that it might be able to offer rates below two per cent, which is the annual interest rate on major banks' standard variable-rate mortgages. Yoji Otani, real estate analyst at Credit Suisse First Boston, said the number of first-time homeowners in Japan aged in their thirties was set to increase until 2006, while the number of households in the greater Tokyo area would increase by 300,000 between 2005 and 2010.
In particular, the number of "Dinkies" (double income, no kids) in their 30s was continuing to increase, particularly in Tokyo, which had fuelled demand for housing loans. GE Consumer Finance in Japan employs 5,000 people, including part- time and contract workers. It plans to use its workforce to start up its new home loan business.
The company said it planned to extend mortgages to applicants who may have been turned away by traditional banks. GE could extend loans at a premium for individuals with higher credit risk, whereas Japanese banks apply almost the same rate for all borrowers. GE, which has consumer financing units in the US, Europe and Asia, established a home lending business in Hong Kong in 2000. Its move in Japan, to be officially announced near the end of this month, comes at a time when banks are expanding their home lending units amid solid demand helped by low interest rates and a demographic shift. "Banks are trying to grow their housing loan business as default rates tend to be lower," said Ned Akov, bank analyst at Macquarie in Tokyo. "They are less risk-weighted than ordinary loans and therefore more capital efficient."
GE said lending rates could be adjusted to reflect a borrower's creditworthiness, and that it might be able to offer rates below two per cent, which is the annual interest rate on major banks' standard variable-rate mortgages. Yoji Otani, real estate analyst at Credit Suisse First Boston, said the number of first-time homeowners in Japan aged in their thirties was set to increase until 2006, while the number of households in the greater Tokyo area would increase by 300,000 between 2005 and 2010.
In particular, the number of "Dinkies" (double income, no kids) in their 30s was continuing to increase, particularly in Tokyo, which had fuelled demand for housing loans. GE Consumer Finance in Japan employs 5,000 people, including part- time and contract workers. It plans to use its workforce to start up its new home loan business.
04.02 | 0
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