When interest rates rise, how much does the monthly payment increase? Calculations for 30 million, 50 million, and 100 million yen

On September 18, 2026, the Bank of Japan raised its policy interest rate to 1.25%. This 0.25% hike brings it to a level not seen in about 31 years, since 1995.

The news was filled with the phrase “first time in 31 years.” However, I don’t think that’s what people with variable-rate mortgages really want to know.

How much will the monthly payment increase?

According to a survey by the Japan Housing Finance Agency, 75.0% of people who took out a mortgage between April and September 2025 chose a variable-rate plan. That is three out of four people. In the same survey, 31.8% of respondents said they were “anxious about whether they understand” the rules for interest rate adjustments, and if you include those who said they “do not understand,” the figure rises to about 40%.

I was one of them. I heard that “the 5-year rule makes it safe,” and without checking what exactly that meant or how it worked, I just assumed it was fine.

So, I calculated it. I looked at three loan amounts: 30 million, 50 million, and 100 million yen, all with a 35-year principal and interest equal repayment plan.

And the other half of this article is about something else.Two of the nine Bank of Japan policy board members opposed this September rate hike. Both of those members were appointed under Prime Minister Takaichi. Then, in July 2027, the terms of the two members currently most in favor of rate hikes will expire.

The discussion on interest rates and the discussion on personnel are connected.

The conclusion first

First: For a 50 million yen, 35-year loan, if the interest rate rises from 0.4% to 1.25%, the monthly payment increases by approximately 19,448 yen. That is about 230,000 yen per year, and a difference of about 8.17 million yen in total repayments over 35 years. For 30 million yen, it increases by 11,669 yen per month, and for 100 million yen, it increases by 38,896 yen per month.

Second: For just this September’s 0.25% increase, it is 6,049 yen per month for 50 million yen. It is 3,629 yen for 30 million yen, and 12,098 yen for 100 million yen. The amount for a single payment might seem manageable. It is because it accumulates over time that it has an impact, not because a single payment will break the household budget.

Third: The 5-year rule only caps the repayment amount; it does not cap the interest. For someone who borrowed 50 million yen at 0.4% three years ago, at a 1.5% interest rate, 57,479 yen of the 127,595 yen monthly payment goes toward interest. Even if the repayment amount stays the same, the principal decreases more slowly.

Fourth: For those with a 35-year fixed rate, nothing will happen this time. However, it does not mean they are “gaining.” The Flat 35 rate in September 2026 is 3.46%. The difference compared to the 1.25% variable rate is about 58,445 yen per month for 50 million yen. One could view those who chose a fixed rate as having paid this difference as an insurance premium.

Fifth: Of the nine Bank of Japan members, the two who opposed the rate hike were appointed under Prime Minister Takaichi. And on July 23, 2027, the terms of the two members considered most aggressive about rate hikes will expire. If these positions are replaced, there will be four members leaning toward easing. Four out of nine is not a majority. However, there are places where it has an effect even without a majority.

  「5年ルールがあるから大丈夫」の中身
  ──────────────────────────────────
  返済額         5年間は変わらない  ○
  金利           すぐ変わる         ×
  利息の額       すぐ増える         ×
  元本の減り     すぐ遅くなる       ×
  5年後の返済額  最大1.25倍まで上がる
  10年後         最大1.5625倍まで

Fact check

Listed in chronological order.

September 2019. The interest rate for Flat 35 (repayment period of 21 years or more) drops to 1.05%. It was a record low.

March 2024. The Bank of Japan ends its negative interest rate policy. For the first time in eight years, we returned to a “world with interest rates.”

July 2024. Policy interest rate raised to 0.25%.

January 2025. Raised to 0.5%.

December 19, 2025. Raised to 0.75%, reaching a level not seen in about 30 years. The vote at this time was unanimous. Following this, Mitsubishi UFJ Bank raised its short-term prime rate, and the base interest rate for housing loans will be reviewed on March 1, 2026.

March 2026. The government appoints Toshio Asada (Professor Emeritus at Chuo University) and Ayano Sato (Professor at Aoyama Gakuin University) as Bank of Japan Policy Board members. Both are known as “reflationists,” supporting active fiscal policy and monetary easing. Mr. Asada took office in April 2026, and Ms. Sato in July 2026.

June 16, 2026. Policy interest rate raised to 1.0%. The vote was 7 to 1, with member Asada dissenting.

June 30, 2026. The dollar-yen exchange rate reaches the 162 yen level for the first time in about 39 years.

August 3, 2026. Mitsubishi UFJ Bank’s short-term prime rate becomes 2.375% per annum.

August 4, 2026. It is reported that Prime Minister Takaichi had requested Bank of Japan Governor Ueda to curb the rise in long-term interest rates through government bond purchases (the meeting itself took place in May 2026).

September 18, 2026. Policy interest rate raised to 1.25%. The vote was 7 to 2. Those who opposed were members Asada and Sato, both of whom argued for keeping rates unchanged.

The same day. Despite the decision to raise rates, the yen was sold, falling to the 158 yen level at one point.

July 23, 2027. The terms of members Hajime Takata and Naoki Tamura expire. Both took office on July 24, 2022, and member Tamura has been considered the most proactive regarding interest rate hikes on the Policy Board.

How much will it increase each month?

Calculated based on a 35-year principal and interest equal repayment plan. We are comparing an interest rate of 0.4% (a typical level for variable rates before March 2024) and 1.25% (the variable rate for megabanks as of September 2026 is 1.248%).

Loan of 30 million yen

• 0.4% … 76,557 yen per month (total repayment 32.15 million yen)

• 1.25% … 88,226 yen per month (total repayment 37.05 million yen)

• Difference … 11,669 yen per month / 140,026 yen per year / 4.9 million yen total

Loan of 50 million yen

• 0.4% … 127,595 yen per month (total repayment 53.59 million yen)

• 1.25% … 147,043 yen/month (total repayment 61.76 million yen)

• Difference … 19,448 yen/month / 233,376 yen/year / 8.17 million yen total

100 million yen loan

• 0.4% … 255,190 yen/month (total repayment 107.18 million yen)

• 1.25% … 294,086 yen/month (total repayment 123.52 million yen)

• Difference … 38,896 yen/month / 466,752 yen/year / 16.34 million yen total

If we isolate just the 0.25% increase from this September, it looks like this.

• 30 million yen … 3,629 yen/month (43,553 yen/year)

• 50 million yen … 6,049 yen/month (72,589 yen/year)

• 100 million yen … 12,098 yen/month (145,178 yen/year)

3,629 yen a month is about the cost of one child’s extracurricular activity. 12,098 yen a month is close to one month’s electricity bill. A single instance is an amount one can bear. The problem is that this has been piling up repeatedly since March 2024.

If the policy interest rate reaches 2.0% and the variable interest rate also becomes 2.0%, the difference compared to 0.4% would be 22,822 yen/month for 30 million yen, 38,036 yen/month for 50 million yen, and 76,072 yen/month for 100 million yen.

Everything up to this point is just calculator work. The next part is where I was most mistaken.

What does the 5-year rule actually cap?

Variable interest rates have a “5-year rule” and a “125% rule.” These are mechanisms where the monthly repayment amount remains unchanged for 5 years even if interest rates rise, and even after the 5-year review, the amount is only increased to a maximum of 1.25 times the previous amount (in the case of equal principal and interest repayment; this does not apply to equal principal repayment).

If you interpret this as “there is no impact for 5 years,” you are mistaken.

What stops is only the repayment amount. The interest rate changes from the following month. And the portion of the repayment that goes toward interest is calculated using that new interest rate.

Let’s look at someone who borrowed 50 million yen at 0.4% over 35 years and has been paying for 3 years. The monthly repayment is 127,595 yen, and the remaining balance is approximately 45.98 million yen.

• At 1.25% interest… 47,899 yen in interest / 79,696 yen in principal (37.5% of the payment is interest)

• At 1.5% interest… 57,479 yen in interest / 70,116 yen in principal (45.0% is interest)

• At 2.0% interest… 76,639 yen in interest / 50,956 yen in principal (60.1% is interest)

• At 2.5% interest… 95,798 yen in interest / 31,797 yen in principal (75.1% is interest)

Even though the amount leaving your bank account is the same, only the speed at which the principal decreases slows down. When you review it after 5 years, the balance hasn’t decreased as much as you thought. That is when the repayment amount increases. This was the reality behind the idea that “it’s fine because there’s a 5-year rule.”

Furthermore, when the interest rate exceeds 3.33%, the monthly interest exceeds the repayment amount itself. At this point, the unpaid interest remains as “accrued interest.” This figure of 3.33% was the same whether the loan amount was 30 million yen or 100 million yen (because it is calculated under the same conditions of 0.4%, 35 years, and 3 years elapsed).

The current policy interest rate is 1.25%, and variable interest rates are in the 1.2–1.3% range. 3.33% is still far off. However, being far off is not the same as it never happening.

Are those with a 35-year fixed rate truly suffering zero damage?

For those who have borrowed with a fixed rate for the entire period, the repayment amount will not change by even 1 yen due to this interest rate hike. This is certain.

But I think it is a bit simplistic to conclude that “this is why fixed was the right choice.”

The interest rate for Flat 35 (repayment period of 21 years or more) in September 2026 is 3.46%. Compared to the variable rate of 1.25%, for 50 million yen over 35 years, the monthly payments are 205,488 yen and 147,043 yen, respectively.There is a difference of 58,445 yen per month.

In other words, those currently borrowing at a fixed rate are paying 58,000 yen more per month than those with a variable rate. In exchange, no matter what percentage the interest rate reaches, their repayment amount will not change. I think this is less about profit or loss and more like an insurance premium.

However, the landscape here changes depending on when you borrowed.

• Those who borrowed in September 2019… 1.05% (the lowest level in history)

• Those who borrowed in 2021… 1.28–1.37%

• Those who borrowed in 2024… 1.82–1.87%

• Those who borrowed in January 2026… 2.08%

• Those who borrow in September 2026… 3.46%

Those who took out a fixed-rate loan at 1.3% in 2021 have been maintaining roughly the same level as the current variable rate of 1.25% for 35 years. For this person, nothing really happens.

On the other hand, someone choosing a fixed rate of 3.46% in 2026 starts off paying over 50,000 yen more per month than a variable rate.Even with the same ’35-year fixed’ term, it has become a completely different product depending on the year it was borrowed. This was a part that would have been invisible if we had framed it as a binary choice between fixed or variable.

Presenting the inconvenient numbers first

I will also present the numbers that are unfavorable to the way I have written this so far.

First. The number of people choosing variable rates is already starting to decrease. According to a survey by the Japan Housing Finance Agency, the variable rate type dropped 4.0 points from 79.0% to 75.0%. The fixed-period choice type increased from 12.2% to 14.9%, and the full-term fixed type increased from 8.8% to 10.1%. It is not the case that ‘everyone is not thinking about anything’.

Second. 73.7% of people anticipate interest rate hikes. This is an 8.0 point increase from the previous 65.7%. This means it is not a surprise attack.

Third. The way variable interest rates rise is not as fast as the policy interest rate. The policy rate moved 1.35 points from -0.1% to 1.25%, but the variable interest rate (after preferential treatment) at mega-banks is 1.248%, which is an increase of about 0.85 points compared to when it was around 0.4%. There is a portion that banks are absorbing by expanding their preferential margins.

Fourth. It is not just payments that are rising. The wage increase rate for the 2026 spring labor offensive was 5.26%, exceeding 5% for three consecutive years. For those whose monthly take-home pay has increased, the weight of a 6,000 yen monthly increase may not be as significant as the number suggests.

Fifth. The Bank of Japan says it will ‘avoid rapid interest rate hikes’. This stance was also indicated at the press conference on September 18. The 3.33% line for unpaid interest is not a realistic figure at this point in time.

What I am anxious about

To be honest, what I am most anxious about is not the 6,000 yen per month.

The fact that the outlook from here on out might be decided by personnel matters rather than interest rate logic is what worries me.

On September 18, 2026, the Bank of Japan decided to raise interest rates. Normally, the yen would be bought. However, on this day, the yen was sold and temporarily fell to the 158 yen range.

What the market was looking at was not the decided interest rate, but thesplit votes instead.

Summary of the free section

• From 0.4% to 1.25%, it is 11,669 yen/month (30 million) / 19,448 yen/month (50 million) / 38,896 yen/month (100 million)

• For just the 0.25% portion in September, it is 3,629 yen / 6,049 yen / 12,098 yen per month

• The 5-year rule only stops the repayment amount. Interest rates and interest also move from the following month

• Unpaid interest occurs at an interest rate of 3.33% (assuming 0.4% for 35 years, 3 years elapsed)

• 35-year fixed rates see zero impact. However, fixed-rate loans taken out in 2026 are at 3.46%, and insurance premiums have increased

This concludes the free portion.

From here on, I will write about what will happen in July 2027 based on how the seats are counted. Currently, there are two members leaning toward easing. Two members will be replaced in July. Adding them together makes four.

Four out of nine is not a majority. Therefore, the idea that the Bank of Japan will be taken over will not happen. Nevertheless, there is a place where even four people can have an effect. I will explain where that place is, along with the reason why the yen was sold on September 18th.

Furthermore, if interest rates are suppressed and the yen continues to weaken, there is a reverse route where household finances become strained even though mortgage payments do not increase. For those with variable interest rates, interest rate hikes might not be the scariest thing. I will also include those calculations.

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