Appended Note 1-4 Housing Loan Repayment Simulation
1. Premise of simulation
As in the case in "Japanese Economy 2005-2006," based on Government Housing Loan Corp.'s "FY2004 Survey on Users of Government Housing Loan Corp. Loans (Buyers of Condominium)," the following model case is assumed by using the average data on buyers of housing (new condominium) on loans from Government Housing Loan Corp..
|Purchase price:||32,452,000 yen|
|Down payment:||8,819,000 yen|
|Amount borrowed from Government Housing Loan Corp.:||16,998,000 yen|
|Amount borrowed from private financial institutions:||6,635,000 yen|
|Household annual income:||6,142,000 yen|
The payment period of the loans both from the Government Housing Loan Corp. and private financial institutions is 30 years, with half of them to be paid on a monthly basis and the other half on a twice-a-year bonus season basis. The interest rate on loan from the Government Housing Loan Corp. is 3.0% (fixed for the first 10 years), the basic rate as of the end of fiscal 2004. Loans from private financial institutions are all at a variable interest rate, with the rate in the initial year set at 1.675%, the average interest rate offered by the financial institutions during their housing loan sales campaign period in the year. The variable interest rate is to be revised twice a year but the annual payment amount remains unchanged for the first five years (the interest rate changes during this period). Five years later, the amount of monthly payment is to be repriced based on borrowings outstanding and the interest rate at that time.
(Setup of cases)
Based on the following 2 cases below, changes in the amount of loan payments were calculated according to the ratio of loan from private financial institutions to total borrowings: model case (about 30%), 50% and 100%.
Case 1): Interest rate rises 1.0% a year
Case 2): Interest rate rises 0.5% a year
(Calculation of amount of monthly payment)
The amount of monthly payment (a) is calculated by the following formula, with r being the interest rate, n being the number of payments, and x being money borrowed.
(Review of the amount of monthly payment)
In Case 1), since it becomes difficult to pay interest in the third year, the amount of monthly payment will be reviewed at that point and every year thereafter. In Table 1-3-7, increases in the ratio of annual income to annual payment from the initial year to the fifth year are shown for both Case 1) and Case 2).