Suruga Bank restarts investment lending

According to several real estate companies, Suruga Bank has restarted lending on investment properties. Two years have passed since the bank found itself at the center of questionable lending schemes that saw it providing finance to over 1,200 investors in a wide-spread share house investment scam. The scandal saw the bank slapped with a six month ban on investment lending by the Financial Services Agency.

This time, lending conditions are said to have tightened considerably. The bank will consider the financial stability and net worth of the borrower (this was not a requirement in the past), and will also conduct stricter checks on the property itself, such as requiring it to have a construction completion certificate.

The maximum loan period has not changed from 25 years, although the interest rate has been reduced from 4.0 ~ 4.5% to a more manageable 1.5 ~ 2.5%. 

45% of the bank’s outstanding loans are to whole-building investors (excluding share houses). The delinquency rate for whole-building borrowers was sitting at 2.38% as of September 2019. For share house investors, the rate was a staggering 40.66%.

Source: Zenkoku Chintai Jutaku Shimbun, February 25, 2020.

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