Mizuho Corporate Bank said Tuesday it will set its long-term prime lending rate at 1.85 percent per year, an increase of 0.35 percentage point.
The increase, effective Wednesday and the first in two months, reflects the recent rise in long-term interest rates on falls in government bond prices.
The long-term prime rate is charged on loans of one year or longer to the most creditworthy corporate clients.
After hearing of Mizuho Corporate’s plan, Shinsei Bank and Aozora Bank said they also will raise their long-term prime lending rates by the same margin to 1.85 percent, also effective Wednesday.
The banks set the rate 0.9 percentage point higher than the coupon on five-year bank debentures it issues monthly.
An increase in the long-term prime rate could harm the economy, as it will raise fixed mortgage rates as well as businesses’ fundraising costs. The rate, which slid to a record-low 1.25 percent in June, rose to 1.6 percent in July before falling back to 1.5 percent in August.