The Bank of Japan\u2019s recent decision to once again raise its short-term interest rate target is set to ripple through the financial sector, prompting major commercial banks to adjust their short-term prime lending rates. These rates, critical in determining the cost of short-term loans to businesses, are expected to rise, leading to an increase in variable housing loan rates\u2014a significant development for homeowners and potential buyers alike.<\/p>\n
Following the Bank of Japan\u2019s policy shift, MUFG Bank swiftly announced it will elevate its short-term prime lending rate starting September 2. This move is anticipated to be mirrored by other leading banks and regional financial institutions.<\/p>\n
The adjustment in short-term prime lending rates is poised to affect the variable rates on housing loans, which are tied to these benchmarks. Approximately 70% of homeowners with mortgages are impacted by such variable rates, which are typically set by adding around 1 percentage point to the prime rate. As the BOJ\u2019s ultra-loose monetary policy recedes, fixed housing loan rates\u2014linked to long-term interest rates\u2014have already been on the rise, signaling a potential shift in the housing market dynamics.<\/p>\n
In conjunction with the rate hike, the BOJ\u2019s policy has led three major banks\u2014MUFG, Sumitomo Mitsui Banking Corp., and Mizuho Bank\u2014to announce increases in interest rates on ordinary deposits, raising them from 0.02% to 0.1% between August and September. This adjustment reflects the broader trend of aligning deposit rates with the BOJ\u2019s monetary policy changes.<\/p>\n
Despite these shifts, Japan\u2019s total household savings continue to exceed household borrowing, a factor noted by a senior BOJ official who indicated that the rate hike is expected to positively affect household finances overall.<\/p>\n","protected":false},"excerpt":{"rendered":"
Following the Bank of Japan\u2019s policy shift, MUFG Bank swiftly announced it will elevate its short-term prime lending rate starting September 2. This move is anticipated to be mirrored by other leading banks and regional financial institutions.<\/p>\n","protected":false},"author":413,"featured_media":26968,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[5190,13384,6233,15138,8026,268,1825,12308,11266],"class_list":["post-26966","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-japan","tag-bank-of-japan","tag-boj","tag-boj-policy","tag-boj-rate-hike","tag-household-debt","tag-japan","tag-mitsui-sumitomo","tag-sumitomo-mitsui-financial-group","tag-sumitomo-mitsui-financial-group-inc"],"reading_time":"2 min read","_links":{"self":[{"href":"https:\/\/www.businessupturn.com\/asia\/wp-json\/wp\/v2\/posts\/26966","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.businessupturn.com\/asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.businessupturn.com\/asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.businessupturn.com\/asia\/wp-json\/wp\/v2\/users\/413"}],"replies":[{"embeddable":true,"href":"https:\/\/www.businessupturn.com\/asia\/wp-json\/wp\/v2\/comments?post=26966"}],"version-history":[{"count":0,"href":"https:\/\/www.businessupturn.com\/asia\/wp-json\/wp\/v2\/posts\/26966\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.businessupturn.com\/asia\/wp-json\/wp\/v2\/media\/26968"}],"wp:attachment":[{"href":"https:\/\/www.businessupturn.com\/asia\/wp-json\/wp\/v2\/media?parent=26966"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.businessupturn.com\/asia\/wp-json\/wp\/v2\/categories?post=26966"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.businessupturn.com\/asia\/wp-json\/wp\/v2\/tags?post=26966"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}