Five of Japan’s mega-banks will reduce interest rates on home loans this month due to increased competition and a relatively low long-term government bond yield.

The Bank of Tokyo-Mitsubishi UFJ (MUFJ) and Sumitomo Mitsui Banking Corporation (SMBC) will reduce their prime rate for a 10-year fixed-rate mortgage by 0.1 points to 1.20%. Mizuho Bank will reduce their 10-year fixed-rate by 0.05 points to 1.20%.

Sumitomo Mitsui Trust Bank will reduce their 10-year rate by 0.05 points to 0.85%, while Resona Bank will reduce their rate by 0.05 points to 1.15%.

The “Flat 35” dropped by 0.04 points to 1.54%. This is the second month in a row to see a fall in the interest rate. For 20-year mortgages, the rate dropped by 0.04 points to 1.31%. A Flat 35 home loan has a fixed interest rate for the entire term of the loan.

Variable rates have been left unchanged.

The 10-year long-term government bond rate, which is usually an indicator of home loan rates, dropped to the 0.3% range.

Sources:
NHK, August 31, 2015.
The Mainichi Shimbun, September 1, 2015.
The Nikkei Shimbun, September 1, 2015.

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