Major Japanese banks have again raised their variable mortgage rates. Mitsubishi UFJ Bank will raise its preferential variable mortgage rate by 0.25 percentage points in September, from the previous month to 1.195%, while Sumitomo Mitsui Banking Corporation will also raise its variable mortgage rate by 0.25 percentage points to 1.525%. This is the first increase in their variable mortgage rates in six months, since March.
That being said, three other banks are actually keeping their rates the same:
- Mizuho Bank: 1.025%
- Resona Bank: 0.95%
- Sumitomo Mitsui Trust Bank: 1.08%
At the same time, though, there is a strong expectation that they will raise rates in October.
Variable rates are closely tied to the Bank of Japan’s policy rate. After a June hike, banks raised their short-term prime rates by 0.25 percentage points, which in turn results in variable-rate jumps. Many banks normally review variable mortgage rates in April and October, but Mitsubishi UFJ Bank and SMBC moved ahead with increases in September.
About 80% of home loan borrowers use variable-rate loans. For many existing borrowers, monthly repayments may remain unchanged for the time being even after the interest rate rises. However, a larger portion of each payment will go toward interest, meaning the outstanding principal will decline more slowly. This makes rising rates especially significant for households with large mortgage balances.
It’s not just variable rates, though; fixed rates are also rising. The average 10-year fixed mortgage rate among the five major banks will rise by 0.088 percentage points to 3.786% in September.
Over the past year, variable mortgage rates have risen by approximately 0.47 percentage points, while 10-year fixed mortgage rates have risen by approximately 1.68 percentage points.
The Japan Housing Finance Agency also announced that the September minimum rate for Flat 35 mortgages with repayment periods of 21 to 35 years will be 3.46%. This is the highest Flat 35 rate since the current system began in October 2017.
These increases can be particularly harsh on younger buyers. According to a January survey by the Sumitomo Mitsui Trust Asset Future Research Institute, 67% of homebuyers in their 30s reported making either a down payment of approximately 10% or no down payment at all. For those in their 40s, that metric was just 59%. The more of your loan that is left unpaid, the more vulnerable you are to variable-rate fluctuations.
If a lot of this article feels familiar to you, that isn’t surprising. This is a continuation of an ongoing trend. We previously talked about the results of December 2025’s benchmark rate hike on older buyers. Some buyers have also been considering ultra-long 40- or even 50-year loans in order to buy property, but those come with their own risks.
Rising mortgage rates are no longer an isolated development. Both variable and fixed borrowing costs have continued to move higher, making the size of the loan, the repayment period, and the type of mortgage increasingly important factors when considering a property purchase. To stay on top of future rate changes, please subscribe to our free newsletter, or if you are ready to begin your Japanese real estate journey, we’d love to hear from you.
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