{"text":[[{"start":10.28,"text":"Japan may still have some of the lowest interest rates in the world, but the rapid increase expected by economists will have far-reaching implications for a population still coming to terms with the end of an era of deflation."}],[{"start":22.64,"text":"At 1.25 per cent, the Bank of Japan’s main policy rate is already at its highest in 30 years. That is still well below annual inflation, but substantial rate increases could end the erosion of the value of bank savings, mostly held by older Japanese, while making it harder for younger people to buy homes and consumer goods."}],[{"start":42.68,"text":"The rapid increase in interest rates is shaping up to be a “war between generations”, as much as between rich and poor, said Shigeto Nagai, chief Japan economist at Oxford Economics."}],[{"start":54.6,"text":"“For households overall, interest rate increases are going to be positive because of the massive deposits they hold,” said Sota Takano, senior economist at Itochu Research Institute. “But if you are aged 30 to 40, and you want to get a mortgage but have not built up the kind of assets older people have, then you are going to be hit the hardest.”"}],[{"start":74.08,"text":"Goki Masui, a 46-year-old legal professional, certainly feels like a winner. He bought a home in Greater Tokyo, where property prices have risen much more than in many areas of Japan, and is untroubled by the prospect of higher borrowing costs."}],[{"start":87.6,"text":"“I own a home and its value has skyrocketed since 2011. Looking at my balance sheet, I feel there’s no problem at all,” Masui said. “But for young people, interest rates are going up, money is hard to borrow and house prices themselves are high, so they can’t buy them.”"}],[{"start":null,"text":"

"}],[{"start":104.76,"text":"For Yuto Horiguchi, 30, the very idea of taking out a housing loan is laughable. “I don’t have that sort of luxury,” he said. “I need my wages to go up.”"}],[{"start":105.26,"text":"Pricier mortgages"}],[{"start":115.2,"text":"While Japanese wages are at last rising faster than inflation, Horiguchi is one of many people of his age in Tokyo who have not seen their incomes keep up with property prices."}],[{"start":125.36,"text":"Nationwide, residential property prices rose 4.4 per cent in 2025, broadly in line with wage growth among younger workers, according to Takano at Itochu. But in central Tokyo, property prices jumped 8.3 per cent."}],[{"start":139.68,"text":"“The main challenge for younger homebuyers until now has been the sharp rise in property prices,” Takano said. “From here, rising mortgage rates are likely to make home ownership increasingly difficult as well.”"}],[{"start":151.6,"text":"The vast majority of Japanese take out variable-rate mortgages due to the recent history of rock-bottom rates. Roughly 75 per cent of new mortgages in Japan are variable, a far higher proportion than in the euro area, US or UK."}],[{"start":166.44,"text":"Even as rates look set to rise, many borrowers are unwilling to abandon variable-rate mortgages. According to Mogecheck, a mortgage broker in Tokyo, such mortgages currently carry average interest rates of about 1.3 to 1.6 per cent compared with 3.8 per cent for 35-year fixed-rate loans. Japan’s headline consumer price annual inflation rate was 2.1 per cent in September."}],[{"start":190.24,"text":"A 28-year-old finance sector worker who declined to be named said he took out a 35-year, ¥47mn housing loan in September at a variable rate of 1 per cent. His monthly payments of ¥110,000 would have risen significantly at the 3 per cent rate offered under a fixed-rate mortgage."}],[{"start":208.52,"text":"“I wanted to take advantage of those low borrowing costs and build up my assets,” he said. “Stock prices have been rising recently so I’m hoping that the assets I have invested there will grow.”"}],[{"start":220.2,"text":"Some borrowers are also pushing out the length of mortgages, even taking out 50-year loans."}],[{"start":225.16,"text":"A Cabinet Office simulation found a one percentage point increase in mortgage rates would leave holders in their thirties with an average additional annual interest burden of about ¥240,000, equivalent to roughly 4 per cent of disposable income."}],[{"start":239.68,"text":"Under repayment terms offered by many lenders, monthly payments stay unchanged for five years even if interest rates rise. But since borrowers repay less principal per month, that just pushes any problems further down the road."}],[{"start":null,"text":""}],[{"start":252.52,"text":"Takashi Shiozawa, an executive with Mogecheck, said that while inflation-adjusted mortgage rates remained negative, the BoJ was gradually narrowing that gap. He warned that banks had begun tightening lending standards for 50-year mortgages in recent months."}],[{"start":266.32,"text":"“People are increasingly wondering whether they should buy now because they’re worried that, as mortgage rates rise, property prices could fall,” Shiozawa said."}],[{"start":266.82,"text":"Less attractive consumer finance"}],[{"start":276.64,"text":"Japan remains a low-leverage economy, but higher rates will still affect consumer borrowing from car purchases to luxury goods."}],[{"start":287.8,"text":"According to the Japan Automobile Manufacturers Association, cash remains the most common way to buy a car, with conventional loans and automakers’ financing each used by about 15 per cent of buyers."}],[{"start":300.6,"text":"Carmaker Nissan said rising funding costs had forced lenders to increase rates after years of keeping them unchanged. Dealers were finding financing discussions increasingly difficult as cars became more expensive, it said."}],[{"start":314.8,"text":"The squeeze is also emerging in other areas of consumer spending. Second-hand luxury goods retailer Allu said in August it was cutting the number of interest-free instalments available on some shopping loans from 60 to 24 because of rising rates, shortening the period over which customers could spread the cost of purchases."}],[{"start":334.88,"text":"Small businesses threatened by loss of cheap credit"}],[{"start":337.88,"text":"Takahiro Yamaguchi wants to expand his rice farm in Ibaraki Prefecture north-east of Tokyo by 50 per cent, the kind of shift to larger-scale agriculture that would help Japan address its low self-sufficiency in food as its workforce contracts."}],[{"start":353.8,"text":"But a slump in rice prices and rising interest rates on loans to buy autonomous tractors and other machinery make Yamaguchi cautious. A loan for a warehouse is already becoming a burden."}],[{"start":365.16,"text":"“We’d like to push ahead as fast as we can but there is a possibility that we could be stopped in our tracks,” he said. “Taking today’s interest rates into account, we might end up delaying it a year.”"}],[{"start":null,"text":""}],[{"start":377.16,"text":"Small businesses are among Japan’s more vulnerable companies as interest rates rise. Oxford Economics estimates a one percentage point increase in borrowing rates could push the proportion of lossmaking small businesses from 27 per cent to 31 per cent."}],[{"start":393.36,"text":"Economists said lower profits could have knock-on negative effects on capital spending, and therefore small enterprises’ competitiveness and ability to raise wages for the 70 per cent of the Japanese workforce they employ."}],[{"start":406,"text":"Masaki Nakano at the Research Institute of Japan Finance Corporation, a government-owned lender, said strong demand for semiconductors and AI was currently outweighing the tightening effect of higher interest rates. But further increases could lead to a “widening of the gaps” between stronger and weaker companies, he said."}],[{"start":null,"text":""}],[{"start":427.78,"text":"Masayuki Fujino, who runs Fuji Seiki, a precision manufacturer in Tokyo, said higher interest rates were “like the damage from a series of jabs in boxing, gradually having more and more of an effect”."}],[{"start":428.28,"text":"Better returns for elderly savers"}],[{"start":441.28,"text":"A more vibrant economy liberated from deflation could eventually outweigh any short-term pain from higher rates for younger Japanese, who are already saving and investing more. Households headed by someone under 30 have the fastest growth in financial assets of any age group — jumping 62 per cent between 2019 and 2024 to an average of ¥3.2mn, according to government data."}],[{"start":469.74,"text":"But they remain substantially poorer than households headed by someone in their sixties, which hold an average of ¥23.4mn in financial assets."}],[{"start":479,"text":"Takeo Kondo, 77-year-old owner of a signage business, is one of the many elderly Japanese who would benefit from better returns on their savings."}],[{"start":487.76,"text":"“There aren’t really any downsides for me,” he said."}],[{"start":null,"text":""}],[{"start":491.74,"text":"With returns on even five-year bank deposits still well below inflation, the finance ministry says some older retail investors have been moving money into higher-yielding government bonds and the rising stock market."}],[{"start":504.08,"text":"Across Japanese households, the proportion of financial assets held in cash and deposits fell five percentage points in the year to June 2026, while the share held in securities rose six points, according to the Japan Research Institute."}],[{"start":523.12,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1793689910_5507.mp3"}