Japan: Building a first-of-its-kind protection for joint mortgage borrowers
Joint mortgages are becoming an increasingly popular route to home ownership in Japan, but they expose couples to a structural gap: traditional mortgage CPI (Creditor Protection Insurance) typically protects only one borrower, leaving the other party’s repayments at risk if life takes an unexpected turn.
Shoichiro Fukushima, Group Leader of Promotion Planning in the Mortgage Loan Business Development Department at, Mortgage Loan business Unit at PayPay Bank, and Yasuko Yokoyama, Chief Manager in Strategic Partnership for BNP Paribas Cardif in Japan, look back on how they joined forces to fill this gap and provided PayPay Bank a highly successful entry into the very competitive Japanese mortgage market.
As a digital bank expanding into mortgages, why did you need to gain a strong foothold in this segment?
Shoichiro Fukushima (PayPay Bank) : PayPay Bank entered the mortgage market as a latecomer, so we knew that simple matching the competition or competing on price would not be enough. We needed a strong, differentiated positioning, and we believed, the most effective way to achieve this was to address the emerging social realities directly. That is why we were keen to work with BNP Paribas Cardif in Japan on the industry’s first(*). Joint Mortgage CPI, bringing a new and meaningful value proposition to mortgage customers.
What were the social issues you identified and how did it translate into a mortgage-related offer?
Shoichiro Fukushima : We observed a steady rise in joint mortgages, driven by increasing property prices and growing number of dual-income households. Yet conventional mortgage CPI typically covers only the insured borrower’s share of loan. If a serious illness such as cancer or others occurs during the repayment period, the other party’s repayments can also become difficult. We felt it was essential to provide protection to people to reduce this shared risk. The idea also came from the front line: our sales teams raised the question, whether such a product could be created, based on what they were hearing from customers.
What is joint mortgage CPI, and what makes it a first in Japan?
Yasuko Yokoyama (BNP Paribas Cardif in Japan) : A joint mortgage is a borrowing arrangement in which two or more people – typically a married couple – each take out a mortgage loan for the same property and act as joint guarantors for each other. In Japan, this structure is commonly known as a “Pair Loan”. With conventional CPI, only the insured person’s portion of loan is covered, leaving the other party’s debt unprotected. Joint mortgage CPI is the first product in Japan designed so that, if one borrower is affected by an unexpected event, the outstanding balance of both borrowers is covered together.
How does the product work in real-life scenarios for couples?
Yasuko Yokoyama :The coverage is designed to respond to a wide range of life-altering situations. If one partner dies, is diagnosed with a prescribed severe disability, or with cancer, the total outstanding balance for both parties can be reduced to zero. If a borrower is hospitalized on a repayment date due to illness or injury, the monthly repayment for both parties is covered. And if hospitalization continues for more than 12 months, the full remaining balance for both parties can also be reduced to zero.
What did each partner bring to make this possible?
Shoichiro Fukushima : We contributed the product concept, based on what we observed in the market and our understanding of the social issues our customers face. We know our customers well and we listen closely to their needs. As a digital bank, we are constantly looking for new ways to identify and address the existing gaps.
Yasuko Yokoyama : BNP Paribas Cardif in Japan with its expertise contributed in rapid co-development and in reducing the administrative burden on CPI through customized operational schemes, including responding to inquiries at call centers on weekends and direct customer response when accepting claims. We also designed a fast underwriting process supported by an automated engine, with strong focus on providing prompt and accurate responses to inquiries and consultations from the partner bank.
What early signals suggest the product is gaining traction, and what comes next?
Shoichiro Fukushima : PayPay Bank was the first in the industry to introduce joint mortgage CPI which quickly helped establish it as a reference point in this area. Since launch, the utilization rate of our joint mortgages increased by 10%, contributing directly to improved profitability. Looking ahead, with property prices continuing to rise and more young customers relying on joint mortgages, we plan to keep co-developing products that meet their evolving needs.
Yasuko Yokoyama : On our side, we are already exploring further co-development opportunities, with a clear focus on making insurance more accessible. We also place greater emphasis on stimulating CPI needs, and to continue delivering new and innovative products and solutions to support PayPay Bank’s mortgage growth.
(*) Based on research by PayPay Bank (as of March 2024)
