Should you choose a fixed or variable rate mortgage in Japan? We compare the pros and cons in the current economic climate.

Interest rates in Japan are finally starting to move after decades of being near zero. If you are buying a home, the biggest decision is: Fixed or Variable?

Variable Rate (Hendo Kinri)

• Current Rate: Approx. 0.3% - 0.5%.
• Pros: Extremely cheap monthly payments right now.
• Cons: If the Bank of Japan raises rates, your payment goes up.
• The "125% Rule": Most banks have a rule that your monthly payment cannot increase by more than 25% every 5 years, even if rates skyrocket. This protects your cash flow but adds to your principal debt.

Fixed Rate (Kotei Kinri)

• Current Rate: Approx. 1.3% - 1.8% (for 35 years).
• Pros: Peace of mind. Your payment never changes for 35 years.
• Cons: You pay more initially.

Flat 35

This is a government-backed fixed-rate loan.

• Requirement: The house must meet high energy-efficiency and earthquake-safety standards.
• Benefit: Easier to qualify for than private bank loans.

👉 Rates: Mortgage Rates in Japan for Foreigners: 2026 Update

Which is Better?

• Choose Variable if: You have a high income and can pay off the loan quickly (10-15 years) or can handle a rate hike.
• Choose Fixed if: You are borrowing for 35 years and want stability for your family budget.

Conclusion

70% of borrowers in Japan choose Variable. But with inflation rising, the safety of a Fixed rate is becoming more attractive in 2026.