How to Revisit Asset Formation Strategies in a Rising Interest Rate Environment

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This is KYO LAB.

As the Bank of Japan continues to raise interest rates, a world with interest rates has become a reality. In this post, I will honestly write about how to revisit my asset formation strategy in light of this rising interest rate environment.

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■ Investment Policy: “Do Not Change, Continue Accumulating Calmly”

I will start with the conclusion. Even with rising interest rates, I do not intend to change my current investment policy. I will continue to accumulate assets calmly, just as I have been doing.

As I have written many times on this blog, I have prioritized following my established rules mechanically rather than wavering in my strategy every time the external environment, such as market conditions or interest rates, changes. I do not believe rising interest rates are a reason to change that policy.

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■ What I am Most Concerned About is “Interest Rates When Taking Out a Loan in the Future”

On the other hand, there is something I am honestly concerned about: the interest rates when the time comes for me to take out a mortgage or similar loan in the future.

I do not yet own a home and am at the stage of considering a purchase in the future. Aside from my current accumulation strategy, the interest rate level at the time I eventually take out a loan is something that will directly affect my future household finances, so I cannot treat it as someone else’s problem.

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■ Checking the Current State of Interest Rates

First, I checked what the current levels are.

At the Monetary Policy Meeting on June 16, 2026, the Bank of Japan raised the policy interest rate to around 1.0%. This is said to be the highest level in about 31 years. As of September 2026, the variable interest rate for mortgages is 1.23% per annum, and the fixed interest rate (Flat 35) is 3.46% per annum.
(Source: MUFG Bank, “What will happen to mortgage interest rates in the future?” https://www.bk.mufg.jp/kariru/jutaku/column/032/index.html, Mogecheck, “When will mortgage rates rise due to the BOJ’s additional rate hike?” https://mogecheck.jp/articles/show/pnl6ZzOV4BDR2k5Ra7PY)

It seems that since the negative interest rate policy was lifted in 2024, we have been gradually returning to a world with interest rates, which is the current situation.

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■ The Difference Between Variable and Fixed Rates is “2.23% Per Annum”

When considering a mortgage, the question of whether to choose a variable or fixed interest rate is a concern.

As of September 2026, the difference between variable and fixed interest rates is 2.23% per annum. It is calculated that for this gap to close, the policy interest rate would need to be raised an additional nine times (in 0.25% increments) from here.
(Source: Mogecheck, ibid.)

In other words, unless variable interest rates continue to rise significantly from here on, variable interest rates are currently more advantageous. However, a report from Mizuho Bank predicts that long-term interest rates will rise to 1.65% by fiscal year 2026, so the premise could change depending on future movements.
(Source: Investorium, “Impact of Interest Rate Hikes and Future Outlook” https://investorium.org/ja/loan/2026-kinri-hikiage-eikyou/)

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■ Depending on the Loan Amount, the Increased Burden Could be in the Tens of Thousands of Yen

I also checked an example calculation to see how much the burden would specifically change.

In a case of a 40 million yen loan with a 35-year repayment period, it was introduced that if the interest rate rises from 0.5% to 0.6%, the monthly repayment amount would increase from approximately 190,000 yen to 197,000 yen, an annual increase in burden of about 80,000 yen.
(Source: Seiken Home, “Will the BOJ rate hike affect 2026 mortgages?” https://seiken55.co.jp/blog/entry-715463/)

Realizing that a difference of just 0.1% can cause such a change, I felt how much the impact on future household finances will vary depending on the interest rate level at the time of actual borrowing.

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■ Not “Should I Buy Now?” but “Prepare on the Premise of Borrowing”

Following this result, I do not think I should rush to buy a home right now.

Views among experts are divided on how interest rates will move in the future. Rather than making a hasty decision that “now is the time to buy,” I intend to apply the attitude I have written about in previous articles—”assume that systems will change and update accordingly”—to interest rates as well.

Instead, I will take this time to understand the mechanisms of both variable and fixed rates and how repayment amounts change when interest rates rise, so that I won’t panic when the time comes to borrow. What I researched this time was exactly one step in that preparation.

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■ Rising Interest Rates Also Have the Aspect of “Increasing Savings”

I was also able to confirm another point that is easy to overlook. Rising interest rates are not just about increasing burdens.

If the interest rate on ordinary deposits is 0.4%, it is calculated that depositing 1 million yen will earn 4,000 yen in interest per year, and 10 million yen will earn 40,000 yen per year. I have not changed my policy of securing cash as a life defense fund, but the fact that even that cash now earns a little more interest than before is one of the realizations that we have returned to a world with interest rates.
(Source: Investorium, ibid.)

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■ Summary

・Do not change investment policies such as accumulation; continue calmly as before.
・What I am most concerned about is the interest rate level when taking out a mortgage in the future.
・In June 2026, the policy interest rate was raised to around 1.0% (the highest level in about 31 years).
・Variable rate 1.23%, fixed rate 3.46%; the difference is 2.23% per annum (as of September 2026).
・There is an estimate that with a 40 million yen loan, a 0.1% rise in interest rates results in an annual burden increase of about 80,000 yen.
・It is not a stage of “should I buy now?” but a stage of understanding the mechanisms and preparing on the premise of borrowing.
・Rising interest rates have the aspect of increasing interest on deposits, not just increasing burdens.

I will not change my investment policy, and it is not yet the stage to make a decision on a mortgage. What became clear this time was that even for a single event like rising interest rates, the way to approach it differs depending on the asset item.

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※ This blog summarizes my personal experiences and thoughts. Investing involves risks. The interest rate levels and calculations introduced are based on information at the time of writing (September 2026) and will change in the future. Since the appropriate decision for choosing a mortgage differs depending on individual circumstances, please consult with financial institutions or professionals when actually borrowing.
I would be happy if you could read this with the feeling that “there is also this way of thinking.”
Please make your own final decisions.
　　　　　　　　　　　　　　© 2026 KYO LAB

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Next: Life defense funds, where to put them in a world with interest rates