The Bank of Japan has raised its policy rate to 1.25%, the highest level in 31 years. The increase is expected to push up mortgage rates, prompting growing concern among homebuyers about higher costs.
The Bank of Japan raised its policy rate to 1.25% on the 18th. The rate reached its highest level since the collapse of the bubble economy, with the move attributed to concerns about inflation risks from higher crude oil prices and a weaker yen. Some also pointed to the need to closely monitor interest rate trends in line with future financial conditions.
Many mortgage borrowers expressed concern that higher interest rates would increase their repayment burden. A housing construction company in Tokyo cited the example of a 40-year mortgage, saying that a rise in the interest rate from 1% to 1.25% would substantially increase monthly repayments.
Experts discussing the situation among people considering buying a home said that some borrowers are choosing variable rates while others are switching to fixed rates. BOJ Governor Kazuo Ueda (植田和男) explained the policy rate increase and indicated that the Bank would continue adjusting policy, including further rate hikes, in response to economic conditions.
Homebuyers' concerns are said to extend beyond interest rate fluctuations to the outlook for the future interest rate environment, with the impact on repayment plans emphasized for those taking out long-term mortgages.