According to an article in the Sept. 3 edition of Asahi Shimbun, 40 percent of all recent housing loans are so-called pair loans, meaning they are taken out by married couples, with both spouses’ individual salaries taken into consideration. In the past, banks did not offer loans to married couples but rather to one or the other spouse. This policy necessarily changed when women with careers married and earned salaries comparable to their husbands’, but mainly it had to do with affordability. The cost of buying a house outstripped the ability of a single breadwinner to pay it in a comfortable manner, so banks adjusted. 

But now, says Asahi, even pair loan seem insufficient to buy a new condo in Tokyo, whose prices have been increasing nonstop. The article uses as an example a couple in their mid-30s living in Meguro who want to buy a bigger place in a neighborhood that is more amenable to raising children. They have two strict criteria that made their search more difficult: they want to live within Tokyo’s 23 wards, and they want a property that will retain its value over time, which is why they insist on buying a new condominium. They had already abandoned one initial criterion—the condo should be within reasonable walking distance to a convenient train station, because all the realtors they talked to said that there are “waiting lists” for new condos with ready access to transportation. 

But the couple lucked out. Last spring they entered a lottery for the chance to buy a new condo in Minato Ward and beat out five other prospective buyers. The unit in question is an 80-square-meter 4 LDK that is only 6 minutes from the nearest station. However, the price is pretty steep: ¥160 million. So in order to make the deal happen the couple sold the condominium where they were living (Asahi does not say how much they got, which would be helpful is assessing how much a used condo in pricey Meguro is going for in real terms) and took out a 40-year variable interest mortgage of ¥150 million as a couple whose combined income is ¥20 million a year. 

The whole idea of a pair loan is to make it easier for a married couple to borrow money by taking into consideration their income as a household, and as indicated above, this borrowing method is slowly becoming the norm for buying a home. A survey by the company Recruit found that in 2024 pair loans accounted for 37 percent of all new mortgages in the Tokyo metropolitan area. In 2018, the rate was 27.7 percent. The use of pair loans has roughly followed the increase in prices of new properties. One real estate research lab found that, nationwide, the average price of a new condo increased by 27 percent between 2018 and 2024, while in Tokyo the increase was 56 percent over the same time period. As has been widely reported, the average price of a new condo in the 23 wards as of July was ¥135 million.

More signicantly, the Ministry of Justice says that in 2022, the average debt balance for a family of four for the first time exceeded the average family annual income, meaning that while housing prices have gone up, income has not, or, at least, not as much. 

All these factors contribute to the greater prevalence of pair loans, which increases the risk of default. If either spouse loses their job or sees a substantial drop in pay; or if a catastrophic illness strikes either spouse or even one of their children, necessitating taking time off from work; or if the couple divorces, the family could lose their home. Divorce is particularly messy with pair loans, since one of the terms is that each spouse becomes the guarantor of the other, meaning that if one spouse cannot pay their share, the other is required to make up for it. 

Another issue is refinancing, a common course when a family requires more disposable income for whatever reason. For instance, the couple could extend the period of the mortgage in order to reduce monthly payment burdens, but in doing so interest on the loan increases, which means in the long run the couple pays more and may thus have less savings in their old age.

All of these factors are par for the course when borrowing money, but according to Asahi, another economic research center found that 41.6 percent of the pair loan borrowers they surveyed “regret” taking out the loan, thinking that a “single person” loan would have had more agreeable terms, or that they should have paid a bigger down payment, or that they should have understood the “protections” in the loan contract more thoroughly before signing it. As one of the researchers said, a family taking out a pair loan should first come up with a repayment plan that offers financial breathing room in the case of any development down the road. If money is expected to be tight, they shouldn’t resort to such a loan because the chance of default is more likely. 

Another problem, and one that is certainly not limited to pair loans, is that couples tend to opt for a variable interest rate since, initially, the bank sets it lower than a fixed rate. Inevitably the interest rate will go up and monthly payments may increase as a result—the Bank of Japan last year implied that it would likely change its low-interest policy sometime soon. In fact, that was one of the reasons the Meguro couple felt they had to buy a new condo right now, because they wanted to get the lowest interest rate without realizing that by choosing variable instead of fixed, the rate would probably be going up anyway. Asahi says that 80 percent of all borrowers choose a variable rate. 

Of course, these problems are mainly a concern for people who want to remain in Tokyo. And it’s not just people looking to buy. Recent news reports say that those who rent in Tokyo on average now have to put one-third of their income toward housing. The gap between living comfortably in Tokyo and living comfortably anywhere else just keeps getting wider.