This report does not constitute a rating action. Further rate hikes will not have a direct impact on underlying assets in the Japan Housing Finance Agency (JHF) series pool. Successive interest rate hikes are a major risk to mortgage performance, however, as they consist only of fixed-rate mortgages. Rising living costs due to price increases in various items, including food, are stressing obligors'repayment capacity. S&P Global Ratings believes that if living costs continue to rise faster than wages, the repayment capacity of some obligors may be stressed. Rising real estate prices are slowing due to repeated increases of interest rates by the Bank of Japan. High-end condominiums in central Tokyo, which previously attracted investment funds, may face significant price
