BUSINESS

BOJ's widening of yields band may raise housing loans and hit consumers

The Bank of Japan’s surprise decision to widen the trading band on 10-year bond yields could lead to higher borrowing costs, while the higher yen triggered by the policy shift will help reduce import costs. | AFP-JIJI

Kyodo

Dec 21, 2022

The Bank of Japan's surprise decision to allow long-term interest rates to move in a wider range will likely raise borrowing rates for households taking out housing loans.

Fixed housing loan rates track movements in Japanese long-term government bond yields. The BOJ on Tuesday widened the trading band for 10-year government bond yields between minus 0.5% and 0.5%, wider than the previous range of minus 0.25% to 0.25%.

"Each bank tends to decide on which rates should be applied toward the end of a month. So it's likely that rates applied from January will rise," said Takashi Shiozawa, an executive at MFS, which operates a service allowing consumers to compare mortgage rates.

BOJ's widening of yields band may raise housing loans and hit consumers

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