BOJ frets about real estate lending boom, watchful of bubble risk
- Techs buoy S&P, Nasdaq; Goldman pushes Dow to record high
- Buy Any Seasonal Market Weakness Ahead of Year End Rally - Oppenheimer (SPY)
- Oil hits 16-month high in buying rush after OPEC agreement
- Consolidated Communications (CNSL) to Acquire FairPoint Communications (FRP) in $1.5B Deal
- Berkshire Hathaway (BRK-A) Book Value Could Be Boosted by $29B from Trump Tax Plan - Analyst
A Japanese flag flutters atop the Bank of Japan building in Tokyo, Japan, September 21, 2016. REUTERS/Toru Hanai/File Photo - RTX2P8PK
News and research before you hear about it on CNBC and others. Claim your 2-week free trial to StreetInsider Premium here.
TOKYO (Reuters) - The Bank of Japan said on Monday it is closely monitoring bank lending to the real estate sector to guard against excessive credit that could lead to overheating and pose risks to financial stability.
The BOJ does not currently see signs of a property bubble, according to a report it released on Monday.
However, the central bank is concerned because the ratio of real estate investment to nominal gross domestic product is uncomfortably high and banks are extremely willing to extend loans to property developers.
The BOJ also expressed concern about falling yields on office buildings in major cities, which suggests that investors have driven prices too high, the report showed.
"On the whole, we are not in an environment of excessive risk taking or overheating in credit," the BOJ said in the report.
"Still, we need to monitor risks posed by the property sector and competition among banks to extend credit."
Commercial bank lending has been rising steadily since the BOJ launched its quantitative easing program in 2013 to spur inflation and end decades of economic malaise.
Despite Japan struggling with low growth and depressed domestic consumption, property development has stood out, being one of the biggest beneficiaries of the increased lending, setting of a wave of residential and office development in Japan's largest cities.
The BOJ said commercial banks' capital adequacy ratios are high enough to withstand financial shocks, according to the report.
The report also said banks do not face any liquidity problems but should continue to carefully manage risks when extending new loans.
(Reporting by Stanley White; Editing by Shri Navaratnam)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Euro zone finance ministers grant Greece short-term debt relief
- U.S. makes new arrest in fraud probe of bankrupt video tech firm
- U.S. services sector activity scales one-year high
Create E-mail Alert Related CategoriesReuters
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!