Prime Minister Junichiro Koizumi expressed willingness Wednesday to disband the Government Housing Loan Corp., the state-run provider of low-interest mortgages, instead of seeking its privatization.

"We will proceed with an eye to dissolving the Government Housing Loan Corp.," Koizumi told the House of Councilors Budget Committee. "There is no need to privatize the entity, since we have only to charge private-sector financial institutions with providing (mortgages)."

The government-backed entity has for decades provided home buyers in relatively low income brackets with low-interest loans by drawing on the state-managed pool of postal savings and contributions to state-run pension plans.

But Koizumi suggested people would still be able to take out loans from commercial financial institutions to purchase homes, even after the government disbands the entity.

Koizumi also expressed readiness to slash government outlays for public works projects associated with highway construction.

"Implementing all of the hitherto approved (highway) construction plans would be burdensome because they would consume a lot of taxpayers' money," he said.

The government "would like to announce by the end of this month a policy guideline to enable drastic reform, which has been so far impossible to implement," he added.