Japan's long-term interest rates have risen sharply, and expectations for the terminal rate have also moved higher. Nomura Securities' Miwa Takashi (美和 卓) explains the key considerations for mortgages and bond investments.
Japan's long-term interest rates rose into the 3% range in September 2026 and have remained at around a 30-year high. Higher long-term interest rates could affect mortgage rates and bond investment decisions, and Miwa Takashi (美和 卓), executive economist in Nomura Securities' Economic Research Department, provided a detailed outlook.
At its September 2026 meeting, the Bank of Japan raised its policy rate guidance level to around 1.25% and left its terminal-rate forecast unchanged at 1.75%. Meanwhile, the US FOMC decided on a 25-basis-point rate hike, and views that the terminal rate will exceed 2% have become widespread in the market. Attention is therefore focused on the outlook for long-term interest rates, including the divergence in Japanese and US interest-rate trends.
Growing inflation concerns against the backdrop of higher crude oil prices are also seen as a factor behind the rise in long-term interest rates. Crude oil prices could move differently depending on developments in the situation involving Iran, leading to the view that the future course of interest rates will remain uncertain.
The report also discussed choices between fixed and floating mortgage rates, as well as potential combinations of government and corporate bonds for bond investment, presenting practical perspectives on managing funds during a period of rising interest rates.