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UPDATE 1-Japan mulling extension of housing loan scheme

(Recasts with ministry comments, background, details)

TOKYO, Aug 19 (Reuters) - The Japanese government may extend a low-interest housing loan scheme until March 2012 because the economic climate remains severe, the land ministry said on Thursday.

“We are considering the plan due to requests from related organisations and as economic conditions are still severe,” said Sumio Uchida, an official at the ministry’s housing bureau.

The loan aid programme, introduced last December as part of an economic stimulus package, reduces annual interest on 35-year fixed-rate loans for eco-friendly and quake-resistant homes by one percentage point for the first 10 years.

The programme was scheduled to end this December.

Prime Minister Naoto Kan said this week he will discuss with relevant ministers whether there is a need to come up with additional economic stimulus measures, as the yen’s persistent strength threatens the economy’s faltering recovery. (Reporting by Yumiko Nishitani and Nathan Layne; Editing by Chris Gallagher)