Japan Bank Loan Demand Falls as Credit Market Thaws
Written on July 22, 2009
Japanese demand for banks loans fell over the past three months as companies turned to an improving credit market for funding and households cut spending amid the worst recession since World War II.
An index of demand for loans by businesses declined to minus 14 in July from 13 in April, the Bank of Japan said in a quarterly survey of loan officers in Tokyo today. Households’ desire to borrow dropped to minus 14, the lowest since the central bank began the report in April 2000.
Bank of Japan Governor Masaaki Shirakawa said last week it has become easier for some companies to sell debt as access to credit markets improved following his policy board’s decision to purchase corporate debt from commercial lenders. Some Japanese may remain reluctant to take on debt until there are more signs of a sustainable economic recovery.
“Companies and households remain anxious about the outlook for the economy,” said Junko Nishioka, economist at RBS Securities Japan Ltd. in Tokyo. Efforts by the Bank of Japan and the government have helped businesses raise cash, Nishioka said.
Since lowering the benchmark overnight lending rate to 0.1 percent in December, the central bank has been buying corporate debt from lenders and providing them with unlimited credit to channel funds to companies fastcash.
Japanese banks became more willing to lend to companies than they were three months ago, the survey showed. An index of willingness to lend money to large businesses rose to 5 this month from minus 1 in April.
Companies are under pressure to cut costs as a dearth of demand at home and abroad leaves factories and workers underused. Large companies plan to cut capital spending by 9.4 percent in the current business year, the central bank’s quarterly Tankan survey showed this month.
Demand for Mortgages
Demand for mortgages slumped to a record minus 12, today’s report showed. Households may have been discouraged from buying properties as land prices resumed falling.
Nationwide average land prices dropped for the first time in four years to 137,000 yen ($1,500) a square meter as of Jan. 1, 2009, down 5.5 percent from the previous year, the National Tax Agency said this month.
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