How will household finances be affected by the “highest interest rate level in 31 years”? A 3-minute explanation of the Bank of Japan's rate hike

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On September 18, 2026, the Bank of Japan raised its policy interest rate from 1.00% to 1.25%. Seeing the news of “the highest level in 31 years,” many people must be wondering, “What will happen to my savings and mortgage?”

In this article, we will break down everything from the facts of what the Bank of Japan decided, to the impact on savings, mortgages, and NISA, and concrete actions you can take starting today, in a way that even those without specialized knowledge can understand.

Conclusion: 3 key points to grasp first

1. The policy interest rate was raised to 1.00%→1.25%. It will be applied from September 24

2. Deposit interest rates are trending upward. However, you need to look at it in terms of how it compares to the inflation rate

3. Mortgages (variable interest rates) are easily affected. How to prepare differs between those who have already borrowed and those who will borrow in the future

1. What did the Bank of Japan decide?

At the Monetary Policy Meeting held on September 17 and 18, the Bank of Japan decided to encourage the uncollateralized overnight call rate to remain at around 1.25% (7 votes for, 2 against).

In addition, the interest rate on excess reserves (the interest rate applied to the complementary deposit facility) has been changed to 1.25%, and the basic loan rate has been changed to 1.5%. The new policy was applied from September 24.

The key point is the “interval between rate hikes.” Until now, the Bank of Japan has proceeded with rate hikes cautiously, leaving an interval of about six months, but this time it was a hike just three months after the June meeting. Although the decision was almost fully priced into the market in advance, it is an important step in the sense that the Bank of Japan has begun to be conscious of the pace of rate hikes.

Furthermore, the statement clearly states that “an accommodative financial environment will be maintained even after the hike to 1.25%,” and this is not a shift to rapid tightening. The policy of “continuing to raise the policy interest rate and adjusting the degree of monetary easing in accordance with economic, price, and financial conditions” has been indicated for the future.

2. Impact on household finances ①: Deposit interest rates will rise

When interest rates rise, the interest rate (interest on excess reserves) that banks receive when they deposit money with the Bank of Japan increases. Since the revenue banks earn from their operations increases, a portion of that is reflected in deposit interest rates.

In fact, Mizuho Bank has announced a regular deposit interest rate of 0.400% per annum (as of September 14, 2026). Compared to the era of “0.001% regular deposits” in the past, this is a major change. Some online banks have set even higher preferential interest rates with conditions such as account linkage.

What is important here is the perspective of looking at “real” rather than “nominal” values. The Bank of Japan states that the underlying inflation rate is approaching 2%. Even if the deposit interest rate is 0.4%, if prices are rising more than that, the purchasing power of cash may be decreasing.

In other words, while the rise in deposit interest rates is good news that “the appeal of deposits has returned,” it also means that we are in an era where it remains difficult to fully protect assets with deposits alone.

*Interest rates change daily. When considering switching deposits, please be sure to check the latest interest rates on each bank’s official website.

3. Impact on household finances ②: What will happen to mortgages?

The impact on mortgages varies greatly depending on the interest rate type.

Variable interest rate types are linked to short-term interest rates, so they are in a position to be easily affected by rate hikes like this one. However, many variable interest rate loans have a “5-year rule” or a “125% rule,” so the monthly repayment amount for those who have already borrowed will not change immediately from the following month. On the other hand, since the interest rate increase may accumulate as unpaid interest, you should check your balance and the applied interest rate regularly.

Those who are about to take out a loan or are considering refinancing should feel more secure by calculating their repayment amounts under multiple scenarios, assuming that we are in a phase where interest rates will rise. Whether a fixed or variable interest rate is better depends on future interest rate forecasts, family structure, and work style. While it cannot be stated definitively, deciding in advance ‘what to do if interest rates rise’ is the best preparation.

4. Impact on household finances (3): Implications for NISA and investment

Rising interest rates also affect the world of investment. Generally, it is said that when interest rates rise, bond prices tend to fall, and bank stocks are more likely to benefit. However, these relationships are merely general trends and do not guarantee future price movements.

For those who are continuing long-term accumulation through the new NISA, what is important is not to change your judgment every time interest rates fluctuate. When deposit interest rates rise, the feeling that ‘maybe deposits are fine’ may arise, but in long-term asset formation, the basic principle is to determine the ratio of deposits to investments according to your goals and time horizon, and to continue steadily.

5. Three checks you can do starting today

1. Check your own deposit interest rates: Compare the interest rates of megabanks and online banks, and check if there are any conditional preferential treatments

2. Check your mortgage type and balance: Understand whether it is variable or fixed, and when the interest rate review timing is

3. Review your household finances on the ‘assumption that interest rates will rise’: Take stock of the balance between fixed costs and borrowings

Summary

This rate hike is a move that shows the Bank of Japan has begun to be conscious of the pace of rate hikes. For households, it can be said that this is a phase where the tailwind of rising deposit interest rates and the headwind of rising borrowing costs are arriving at the same time.

The important thing is to relate the news to your own situation. By checking your deposits, loans, and investments just once, your future decisions will become much easier.