My family is preparing to build a new house in central Tokyo and trying to decide which mortgage to take. Part of me thinks the BOJ is going to find it difficult to raise rates a whole lot further (it’s going to squeeze households and SMEs), so an adjustable rate may still be viable. But on the other hand, if rates go all the way up to 1% or higher, it may be worth the peace of mind to just get a fixed rate now before it rises any further.
Or maybe it’s better to just sit on the sidelines for a year or two and see what happens to the real estate market. Problem with this is we’ve already paid a JPY 3 million deposit on a piece of land that we’d lose if we back out now.
Around 70% of mortgages in Japan are adjustable rate, but I’m not sure if the current environment may change that stat for those taking out loans at the moment.
Any thoughts or suggestions are welcome.
by Southerndusk
