The mechanism by which changes in the policy rate affect mortgage variable rates through the short-term prime rate was outlined, along with current interest-rate levels and the outlook.
After explaining the policy rate previously, the current situation was outlined as follows: the rate was negative through March 2024, was raised to 0.25% following the decision on 31 July 2024, and is currently around 1.25%.
Because the policy rate serves as the benchmark for the short-term prime rate, it is used as the lending rate for loans to prime corporate borrowers. The relationship whereby movements in the short-term prime rate serve as the benchmark for mortgage variable rates was explained.
The short-term prime rate had reportedly remained effectively fixed at 1.475%, which was one reason many people chose variable rates. Going forward, borrowers are expected to review their repayment plans with the possibility of higher interest rates in mind.
Hokkoku Bank's latest short-term prime rate is currently 3.075% (from 4 August 2026), and the next revision is expected to raise it to 3.325% (from 5 November 2026). Because the actual mortgage rate applied varies by bank, preferential discounts are generally deducted before the rate is applied in practice.