In Japan, the Era of ‘Free’ Mortgages Is Coming to an End

Published On Sep 4, 2024, 12:00 AM

The Bank of Japan has ended its decades-long policy of ultralow interest rates, leading to rising mortgage rates for homeowners. Many homebuyers in Japan, accustomed to extremely low rates of around 0.3% to 0.4% for floating-rate mortgages and just over 1% for fixed-rate loans, will face higher costs as rates are predicted to reach 1% in the next two years. This increase may force households to reduce their spending, potentially harming the overall economy, which is already experiencing sluggish growth due to weak consumer demand.

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The rise in mortgage rates in Japan could negatively affect consumer spending, which is crucial to economic growth. As households cut back on expenditures to manage higher loan costs, this could lead to a slowdown in various sectors.

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