Long-term interest rates have risen to around 3% for the first time in approximately 30 years, fueling uncertainty over mortgages. Younger people are concerned that rising interest rates will extend the burden of repayments, and it has been pointed out that, combined with rising home prices, this could affect decisions about buying a home.
The yield on newly issued 10-year Japanese government bonds, a benchmark for long-term interest rates, briefly hit 3% and rose to 3.005% by the evening. Market participants attribute the move to expectations of an early Bank of Japan rate hike and fiscal concerns, while the need to assess the impact from multiple perspectives has also been highlighted.
Yoshimura Kentaro (吉村 研太郎), head of the Bank of Japan’s Niigata Branch, said that rising long-term interest rates would increase companies’ funding costs, while also bringing positive factors such as higher interest on time deposits. He said it was important to determine the impact across a range of stakeholders.
Younger people are concerned about rising mortgage rates, with some saying that repayment periods could extend from the previous 30 to 35 years to around 40 years. Some have also said that building a house is becoming pointless.
There is a view that the impact on homebuilders could be negative if rising interest rates coincide with already elevated home prices in some regions. Some have also said they want to assess the overall impact going forward.