Japan’s 5 megabanks to reduce interest rates this month

On July 29, Japan’s five megabanks released their home loan interest rates for the month of August. With the long-term interest rate kept within limits, all five banks will be reducing the base rate on 10-year fixed-rate mortgages.

Mizuho, Resona, and Sumitomo Mitsui Trust Bank will reduce rates by 0.10 points, Mitsubishi UFJ by 0.05 points, and Sumitomo Mitsui Bank by 0.06 points. 

The premiums 10-year fixed rates are:

  • Mitsubishi UFJ: 0.99%
  • Mizuho Bank: 0.95%
  • Sumitomo Mitsui Banking Corporation: 0.98%
  • Sumitomo Mitsui Trust Bank: 0.90%
  • Resona Bank: 0.95%

Variable rates will not be changed.

The interest on fixed-rate mortgages follows movements in the domestic bond market, particularly the 10-year yield on government bonds. If those yields rise, this tends to result in an increase in interest rates. The 10-year yield was 0.184% at the end of July, down from 0.236% at the beginning of June. The Bank of Japan is maintaining a stimulus program to keep rates low, targeting a 0.25% yield on 10-year government bonds.

In 1990 and 1991, home loan interest rates in Japan were around 8%. In the US, they were up to 10% in 1990, and in Australia they had reached a record high of 17%.

Source: NTV News, July 29, 2022.

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