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- Major Japanese banks announced a rate hike for fixed-rate mortgages starting in August.
- Long-term government bond yields have reached their highest level since the autumn of 1996.
- 10-year government bond yields temporarily exceeded 2.8%.
- Mortgage rates are tied to the 10-year government bond yield.
- Exact interest rates depend on each bank's official disclosure.
Anyone carrying a mortgage in Japan, or pricing one in yen, should keep August's rate sheet. Japan's five largest lenders all raised fixed mortgage rates for August. The best ten-year fixed rate now averages 3.698%, up 0.198 points in a month, the highest since comparable records began in April 2006 and the thirteenth consecutive monthly record.
By bank: MUFG 3.59%, SMBC 3.65%, Mizuho 3.35%, Resona 3.795%, and Sumitomo Mitsui Trust above 4.1%. Fixed rates track the ten-year government bond yield, which touched roughly 2.8% in July — a level last seen in the mid-1990s.
The arithmetic is brutal. On a 100 million yen, 35-year loan, monthly payments run about 306,000 yen at 1.5% versus about 425,000 yen at 3.698% — nearly 120,000 yen more each month, and over 40 million yen more across the term.
Three things follow for overseas buyers. Foreign applicants rarely receive the headline rate, so budget one or two notches higher. Borrowing in yen versus borrowing at home to buy in Japan are entirely different risk structures. And with central Tokyo resale yields typically running 3-4%, a 3.7% funding cost erases the positive carry that made leveraged buying attractive.
Watch whether the ten-year yield holds below 2.5%, the BOJ's September language, and September's rate sheet.