Several of Japan’s main banks will be increasing the interest rates offered on their fixed-rate home loans this month.
Mizuho Bank will increase their 10-year fixed interest rate by 0.1 points to 0.80%. This is 0.15 points higher than the historic low of 0.65% reached in August 2016. Sumitomo Mitsui Trust Bank will increase prime rates for 15 ~ 30-year fixed-rate home loans by 0.1 points from last month to 0.85 ~ 0.95%, but will leave their 10-year fixed rates at 0.45%. The Bank of Tokyo-Mitsubishi UFJ will leave their 10-year rate at 0.60%.
The Bank of Japan’s introduction of negative interest rates in February 2016 saw 10-year fixed interest rates on home loans drop from around 1.5% in January down to 0.5 ~ 0.7% by the middle of the year. In 2011, prime interest rates were between 2 ~ 2.5%.
Fixed-term interest rates offered by Japanese banks tend to follow movements of the long-term government bond yields. Since the US election results in November and the anticipation of the US Federal Reserve raising their interest rates later this month, Japan’s 10-year bond yields have risen into positive territory for the first time since March.
As bond yields increase, so too will fixed-term interest rates on mortgages offered by retail banks to their customers.
Jiji Press, November 29, 2016.
The Asahi Shimbun, November 29, 2016.