The BOJ raised its policy rate to 1.25%, the highest level since 1995. The move is expected to affect households in their 60s and 70s that still have outstanding home loans, making it important to review their repayment plans going forward.
At its monetary policy meeting on 18 September 2026, the Bank of Japan raised its policy rate by 0.25 percentage points to 1.25%. The BOJ said the move was intended to contain the risk of an upside surprise in inflation. This was an additional rate increase three months after the 0.25% hike in June 2026, and the rate is now at its highest long-term level in approximately 31 years.
A certain number of households in their 60s and 70s still have outstanding home loans. According to a survey, 14.3% of households in their 60s have outstanding borrowing, compared with 6.7% of those in their 70s. Among households with outstanding balances, the average is ¥6.97 million for those in their 60s, with a median of ¥3 million, and ¥9.27 million for those in their 70s, with a median of ¥2.75 million.
The Japan Housing Finance Agency’s survey of actual borrowing conditions shows that 75.0% of new home-loan borrowers choose variable-rate loans. While variable rates are reviewed every six months by many financial institutions, repayment amounts are often prevented from changing immediately through mechanisms such as the five-year rule and the 1.25x rule.
Based on calculations by the editorial team, the 0.25-percentage-point rate hike is expected to increase monthly repayments by approximately ¥750–¥790 for an average outstanding balance of ¥6.97 million among borrowers in their 60s, and by approximately ¥1,000–¥1,050 for an average balance of ¥9.27 million among those in their 70s. The increase is likely to be felt more keenly by households whose income is primarily from pensions than by working-age households, analysts say.