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The story
On the 31st, Mitsubishi UFJ Bank and Sumitomo Mitsui Banking Corporation announced the mortgage rates that will apply in September, raising the best variable rate — the option most borrowers choose — from the previous month. This reflects the Bank of Japan’s policy rate hike decided in June, and all five major banks have raised their best 10-year fixed rate. On 5ch, threads featured complaints about rising repayment burdens, reports on how people’s own rates had actually changed, and questions about the rate gap with the Flat 35 fixed-rate loan. Opinions were split over whether variable or fixed rates are the better deal, with many also worried about the impact on the generation about to buy homes.
Published 8/31 (Mon) 18:06
Kyodo News
Mitsubishi UFJ Bank and four other major banks announced on the 31st the mortgage rates that will apply in September. Two of them, Mitsubishi UFJ Bank and Sumitomo Mitsui Banking Corporation, raised the best variable rate — the option most borrowers choose — from the previous month, reflecting the Bank of Japan’s policy rate hike decided in June. All five major banks are raising their best 10-year fixed rate.
Source: news.yahoo.co.jp / Original article here
What people said
They're raising it by double digits (basis points)? The BOJ's merciless.
It's not like the BOJ sets that rate directly, though.
I hear about Flat 35 a lot, but is the fixed rate actually 3.5%? Isn't variable still way cheaper?
In my case I started 9 years ago, so…
No no, the "35" in Flat 35 refers to the 35-year fixed term, not the rate. The applicable rate changes monthly and varies quite a bit depending on the loan conditions. I posted the base rate in Re: #32.
No effect if the interest rate on the company's own borrowing doesn't rise. But if people start avoiding custom-built or new homes because they hate rising mortgage rates, sash orders will drop over the long run, revenue falls, and yeah, less work.
How would you even know if a company has borrowings? By the way, apparently my company has zero debt.
Huh, a debt-free company in this day and age. But borrowing can also be a sign of corporate strength when it comes to growth — there's a view that being able to borrow from a bank equals having credibility. You can tell if a company has debt by checking its financial statements; a corporation has to disclose them anyway.
And what happens then? Jobs?
Buying a house now is seriously rough. I built mine 15 years ago when the variable rate was 0.75%. Back then there was also the Eco Points housing subsidy worth 300,000 yen, and I think consumption tax was still 8%. The home builder even threw in a free 20-tatami-mat AC unit and a storage heater. Now curtains and bath/toilet fixtures have all gone up in price, consumption tax is 10%, rates are high, and even looking at flyers from the same builder I used, house prices are up 20%. I'm just a low-level salaryman, but I'm really glad I built my house when I did. Come to think of it, fire insurance has gone up too.
Exactly like the 1989 bubble. Ordinary people end up house-hunting one prefecture over — sure, houses versus condos are different — but once it burst, nearby areas in neighboring prefectures became affordable.
If they don't, fewer suckers will buy houses — wonder what they'll do.
Rent going up tens of percent every two years, though.
Tiny houses are just going to become the standard from here on.
Places over an hour by train from Tokyo Station are still cheap.
Doesn't bother me one bit!!
As long as it doesn't go up, it's no big deal.
Grr! Nothing ever goes my way…
Not yet! It's not over yet!
Just pay off the remaining balance in one go.
I'm basically unbeatable, right?
Doesn't it feel empty, bragging when nobody's engaging with you?
About the level of downgrading your once-a-month treat from a fancy steakhouse to a Gusto family restaurant. (Mansei is an upscale steakhouse chain; Gusto is a cheap family-restaurant chain)
My fixed rate is 1.25% lol
Depends on the bank. Within the same bank at the same time, there's no individual variation.
Just checked mine — it went from 1.095% to 1.295%. This month happened to be my review month.
Background and Key Points of This Topic
Variable mortgage rates aren’t tied directly to the BOJ’s policy rate itself, but rather to each bank’s own “short-term prime rate.” What’s being reflected now is the rate hike the BOJ decided in June — since banks only revise their rates a few times a year, changes to storefront rates show up with a lag of several months. It’s also a common misconception on the thread that “variable rate goes up = monthly payment increases immediately.” In fact, most banks only review the actual monthly payment amount once every 5 years, and cap any increase at 125% of the previous payment under the “five-year rule” and “125% rule” — so a rate hike doesn’t necessarily hit household budgets right away. Opinions in the thread were split on whether variable or fixed is the better deal, and there were repeated questions about Flat 35’s rate levels — but it’s easy to misunderstand that Flat 35 is the product name for a full-term fixed-rate loan handled by the Japan Housing Finance Agency, and the actual rate applied varies by which financial institution handles it and the loan conditions.
*This article is compiled from excerpts and a summary of the 5ch (News Express+) thread “[Banks] Two Banks Raise Variable Mortgage Rates — September, Reflecting BOJ Hike.”
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