It has been projected that in 2009, Japan’s housing starts will fall below the one million mark for the first time in 42 years. In response to this, and in a seeming attempt to spur economic recovery, the government has revealed plans to roll out a mortgage-reduction program for 2010.

From a report in today’s Nikkei:

Under the program, homeowners taking out 35-year loans from an affiliated lender will have the mortgage rate reduced by 1 percentage point for the first 10 years.

The offer will be available only for homeowners taking out such loans next year. Also, homes purchased with the loan must be one of the following: energy-efficient, handicapped-accessible or quake-resistant.

The government intends to put 260 billion yen into the lending program, which will use the Japan Housing Finance Agency to issue mortgages. Currently, rates on mortgages taken out from the Japan Housing Finance Agency stand at 2.6%, which means those taking out new mortgages under the plan in 2010 will pay 1.6% interest for the first ten years of the loan.

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