[Comparison] Housing Loan Variable Interest Rates: Major Banks and Online Banks Reverse in October. We Compared All 7 Major Banks
The idea that “online banks are cheaper” may no longer hold true.
On September 18, the Bank of Japan raised its policy interest rate from 1.00% to 1.25%. This is the second increase in three months, following the one in June. When our editorial department compared the figures for major banks to see how October housing loan interest rates moved in response, the results were, frankly, a bit surprising.
For the best variable interest rates, major banks are in the 1.2% range, while online banks are in the 1.7–1.8% range. The long-held conventional wisdom that “variable rates are cheaper at online banks” has been reversed, at least for new loans in October.
What we compared and how
We compared the variable interest rates (best available) for new loans taken out in October 2026. The seven banks included are Mitsubishi UFJ Bank, Resona Bank, and Mizuho Bank from the major banks; and au Jibun Bank, Rakuten Bank, and Sony Bank from the online banks, plus SBI Shinsei Bank. For reference, we also included the all-period fixed-rate Flat 35.
The figures were confirmed on October 2, 2026, via each bank’s official website, the Japan Housing Finance Agency, and housing loan comparison sites. The best available interest rates are subject to conditions such as “salary transfer” and “loan amount being 80% or less of the property value,” and the actual interest rate may vary depending on the screening. Even within the same bank, rates can differ by more than 0.1% depending on conditions, so please read the figures in the table as “the lowest interest rate if conditions are met.”
In addition, we have organized the monthly repayment amount for a 30 million yen loan over 35 years and when the interest rate hike will affect those who have already taken out a variable rate loan.
Data Organization: October Variable Interest Rates, 7-Bank Comparison
The lowest was Mitsubishi UFJ Bank at 1.195%. Resona Bank followed at 1.240%, Mizuho Bank at 1.275%, and SBI Shinsei Bank at 1.340%.
On the other hand, online banks were au Jibun Bank at 1.734%, Rakuten Bank at 1.747%, and Sony Bank at 1.847%. The difference from the major banks is approximately 0.5–0.65%.
Looking at the movement from the previous month, the reason becomes a bit clearer. Sony Bank increased by +0.500% in one month, SBI Shinsei Bank by +0.350%, and Resona Bank by +0.300%. Mitsubishi UFJ Bank had already raised its rates in September and kept them unchanged in October. According to reports, the base interest rates for variable loans at the five major banks are all aligned at 3.375% in October.
The editorial department’s view is that online banks review their new loan interest rates every month and immediately reflect increases in market interest rates. Major banks often adjust their base interest rates in line with their twice-yearly reviews, and I believe this time lag is what is reflected in this “reversal.” In other words, the low rates of major banks could be caught up with in the next review.
Furthermore, it is reported that all five major banks raised their fixed interest rates in October. Not only variable but also fixed rates have risen, making the option of “escaping to a fixed rate for now” more expensive than before. The reference Flat 35 rate is 3.830%. The difference from the lowest variable rate exceeds 2.6%.
What’s different: 3 things we saw by comparing them
First, a 0.65% difference is a 10,000 yen difference per month. For a 30 million yen loan over 35 years, it is 87,439 yen per month at Mitsubishi UFJ Bank’s 1.195%, and 97,039 yen at Sony Bank’s 1.847%. The difference is about 9,600 yen per month, or about 115,000 yen per year. Assuming the interest rate does not change for 35 years, the total interest for Mitsubishi UFJ Bank is about 6.72 million yen, and for Sony Bank it is about 10.76 million yen. The difference exceeds 4 million yen.
Another thing that caught my attention is the reported trend of choosing ultra-long-term loans of 40 or 50 years to keep repayment amounts down. If we calculate at 1.195%, the monthly repayment drops from 87,439 yen for 35 years to 66,440 yen for 50 years. However, the total interest increases from about 6.72 million yen to about 9.86 million yen. While monthly payments become easier, the interest paid is calculated to increase by more than 3 million yen.
Second, a single 0.25% interest rate hike equals 3,600 yen per month.
For every 0.25% increase from 1.20%, the monthly repayment amount increases by approximately 3,600 to 3,900 yen. If four consecutive rate hikes bring it to 2.20%, it will be 102,486 yen per month. That is an increase of 14,975 yen from now. Some private research institutes are predicting another 0.25% rate hike as early as December.
Third, for those who have already borrowed, it will arrive with a time lag.
Most major banks review their base interest rates twice a year, in April and October, and reflect them in repayments starting about three months later. The June rate hike will be reflected in this October review, starting from the January 2027 repayment. The September rate hike is expected to be reflected in the April 2027 review, starting from the July repayment. Furthermore, if there are “5-year rules” and “125% rules,” the repayment amount itself will not increase immediately. However, during that time, the proportion of interest increases, and the reduction of the principal slows down. The fact that the repayment amount does not change does not mean you are safe; that is the scary part of this mechanism.
Conclusion: How to choose based on your situation
Those planning to borrow with a variable rate will find major brick-and-mortar banks more advantageous as of October. However, as mentioned earlier, this is partly due to differences in the timing of rate reviews. Comparing whether the “preferential rate applies for the entire term” and whether the “5-year/125% rule exists” is more effective for minimizing fluctuations in the total 35-year cost than simply choosing the “bank with the lowest rate right now.”
Those who were planning to borrow from an online bank should consider getting a quote from a major bank as well. A difference of 9,600 yen per month is an amount that cannot be ignored, even after accounting for differences in group credit life insurance premiums and fees.
Those who have already borrowed with a variable rate should first check their repayment schedule to see “how much the principal has decreased.” Starting with repayments from January 2027, the proportion of interest is expected to increase. If you are going to make early repayments, the effect is greater the earlier you do it, before interest rates rise completely.
Those who are genuinely worried about rising interest rates have the option of refinancing to a fixed rate. However, Flat 35 is at 3.830%, which is more than 2.6% higher than the lowest variable rate. Since there are also refinancing fees, I think it is best to decide “how much of a monthly increase you can withstand” before comparing.
A word from the editorial department
After laying out the numbers, we realized that we ourselves had the assumption that “online banks equal cheaper.” Once you take out a home loan, you cannot easily change it. Do not choose based on assumptions; properly compare them every time. In the end, I think that is the most effective measure.
*This article is a comparison based on publicly available information and does not recommend any specific choice. Please check the official websites of each company for the latest information.
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