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Standard & Poor’s warned Friday that Japanese banks should be cautious about a possible rise in housing loan defaults as they compete for a bigger share of the market before the government corporation handling the loans is terminated.

The U.S. credit-rating agency said the nation’s major banks, most of which are getting over their bad-loan struggles, are aiming to bolster their retail banking business, especially in the field of “relatively safer” housing loans.

Competition for customers is heating up ahead of the abolition in April 2007 of the state-backed Housing Loan Corp., it said.

“Given the races for market share, some banks can be seen easing their screening standards for housing loans,” said Naoko Nemoto, managing director of S&P’s Ratings Services section. If interest rates rise in the future, there might be an increasing number of customers who cannot pay their mortgages, she said in a lecture in Tokyo.

The size of the housing loan market in Japan has been stable at about 190 trillion, yen S&P said. Home ownership in the country rose to 43.8 percent last year from 34.4 percent in 1995.

The average daily balance of Japanese bank lending grew 0.2 percent in August from a year earlier to 386.99 trillion yen. The figures showed bank lending rose for the first time in seven years, in what many saw as fresh evidence of Japan’s economic recovery.

In addition, the Bank of Japan has been increasingly viewed to be close to changing its ultra-loose monetary policy.

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