Japan interest rate trends impact savings and mortgages

Interest rate shifts in Japan are affecting both personal savings and mortgage products. Japan Post Bank is scheduled to increase its ordinary deposit interest rate to 0.5 percent per annum starting November 9. This change means an additional 3,000 yen in annual interest for a 3 million yen deposit.

In the mortgage market, trends show a divergence between fixed and variable rates. While long-term interest rates have stabilized somewhat, with the 10-year Japanese government bond yield settling in the 2 percent range, the Bank of Japan has maintained its policy rate at 1.25 percent. Major banks, including Mitsui Sumitomo, MUFG, and Mizuho, have seen variable mortgage rates align, though further increases are anticipated depending on central bank actions.

Fixed-rate products, such as Flat 35, have seen slight decreases due to stabilizing long-term rates, with rates around 3.84 percent. Financial experts advise borrowers to conduct rigorous simulations to ensure household stability if rates rise by 1 percent, particularly when utilizing ultra-long-term loans of 40 to 50 years.