This article outlines how a Bank of Japan rate hike could affect household finances, focusing on mortgage rate trends and the potential impact on the New NISA. It explains the differences between variable and fixed rates, as well as points to consider when refinancing or taking out a new loan.
A rate hike means that the Bank of Japan raises its policy rate, affecting market interest rates and making banks' lending and deposit rates more likely to change. Rate hikes are said to be implemented in stages with the aim of stabilizing the economy, making them a topic relevant to household finances.
As for the impact on mortgages, variable-rate loans are more susceptible to market interest rates, and if rate hikes continue, the interest rate on the loan may be revised. By contrast, the rate on a fixed-rate loan is maintained throughout the contracted period, so rate hikes generally have no impact on repayments.
When taking out a new mortgage, the fixed rate may rise as market interest rates increase. Borrowers are therefore advised to confirm whether they have a variable- or fixed-rate loan and when the interest rate and repayment amount will be reviewed.