Three of Japan’s five top mega-banks plan to increase home loan interest rates this month, while two will reduce rates.

Sumitomo Mitsui Trust Bank, Resona Bank and Mizuho Bank will increase the base rates on 10-year fixed-rate mortgages by between 0.10 ~ 0.20 points on new loans issued this month. All three banks will offer 1.05% fixed-rate loans. Meanwhile, Mitsubishi UFJ and Sumitomo Mitsui Bank will reduce their rates by 0.06 points to 0.83%. 

Variable rates will remain unchanged. 

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 0.252% at the end of September, up from 0.230% at the end of August. 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%. Currently, US 10-year fixed-rate mortgages are around 6%, and 7% in Australia.