In long-term fear, big banks hike rates on housing loans


The nation’s three biggest banks are preparing to raise fixed interest rates on housing loans as expectations grow that the Bank of Japan’s aggressive quantitative easing will begin pushing up long-term interest rates.

Sumitomo Mitsui Banking Corp. and Mizuho Bank announced Tuesday that they will raise fixed rates in May. Bank of Tokyo-Mitsubishi UFJ decided Friday to hike rates.

In addition to the banks’ moves, however, floating-rate borrowers have already begun shifting to fixed-rate loans because they expect their floating rates to rise steeply in the foreseeable future.

Since the BOJ announced its “quantitative and qualitative” easing steps on April 4, stock prices have shot up and the yen has weakened substantially against other currencies. But the yield on the benchmark 10-year Japanese government bond, Japan’s key long-term interest rate, has lacked direction.

Immediately after the announcement, the yield dropped to a record low of 0.315 percent. It later took an upturn and has since been repeating minor ups and downs in the 0.55 to 0.65 percent range.

Given the situation, the three banks kept their floating rates unchanged at 2.40 to 2.49 percent while increasing their fixed rates, which will eventually become lower than the floating rates if the benchmark interest rate goes higher.

Sumitomo Mitsui is planning hikes of 0.05 to 0.11 percent for five- to 35-year loans, Mizuho 0.05 to 0.10 percent for two- to 10-year loans and Bank of Tokyo-Mitsubishi 0.05 to 0.10 percent for five- to 20-year loans. The fixed rates on popular 10-year loans will stand at 3.0 percent or above at the three banks.

The banks made the fixed-rate hike decisions on the grounds that the BOJ’s bold easing may push up Japan’s long-term interest rates, a major commercial bank official said — a hazard the central bank will do anything to avoid because it will pose a major danger to the economy.