In the Tokyo bond market on the 1st, long-term interest rates reached 3% for the first time in about 30 years, which is expected to lead to higher fixed-rate mortgages and increased corporate funding costs. The Japan Housing Finance Agency has changed the September applicable interest rate for the fixed-rate mortgage "Flat 35" to a record high of 3.46% to 5.69% per annum for repayment periods of over 21 years and up to 35 years. Going forward, private fixed rates at major banks and others are also expected to rise, and variable rates are also increasing, with the burden expected to grow especially for younger people who are refraining from buying homes. For companies, increased interest payment burdens could pressure management; according to Tokyo Shoko Research estimates, if lending rates for small and medium-sized enterprises rise by 0.25%, ordinary profit would be pushed down by an average of over 410,000 yen per year. Naoki Hattori, chief Japan economist at Mizuho Research Institute, analyzes that "the rise in long-term interest rates has a greater negative impact on companies than on households, and small and medium-sized enterprises with high interest-bearing debt ratios are more susceptible." On the other hand, benefits can also be expected, such as increased income from higher interest rates on bank time deposits and individual government bonds, and higher insurance payouts due to life insurance companies raising their assumed interest rates.
Long-term interest rates hit 3% for first time in 30 years, indicating a rise in yields.
