The 'World with Interest Rates' Has Arrived—What Should Households Do Now Regarding Savings, Individual Government Bonds, and Mortgages?
Hello, I am Yamagishi, an independent financial planner. Recently, there hasn’t been a day where I haven’t heard the word ‘interest rate’ in the news. Since entering October, there have also been reports that ‘the yield on 10-year government bonds has reached 3% for the first time in about 30 years.’ I imagine many of you are feeling anxious, thinking, ‘I sort of understand that interest rates are rising, but what should my household do?’
As a financial planner, my top priority is to help clients ‘grow and protect’ their assets. Today, I will try to explain in simple terms how you should think about savings, individual government bonds, and mortgages now that interest rates are rising, while avoiding difficult jargon as much as possible. It will take about 10 minutes to read, so please grab a cup of tea and join me for a relaxed look at this.
■ What is happening now—Let’s organize it with numbers
First, let’s summarize the current interest rate figures in a single table.
・Bank of Japan policy interest rate: Around 1.25% (raised in September). It is reported that there is a high probability it will be kept unchanged at the meeting on October 29-30.
・10-year government bond yield: Reported to have reached 3% for the first time in about 30 years.
・Individual government bonds (October offering): Variable 10-year: 2.05% / Fixed 5-year: 2.39% / Fixed 3-year: 2.07% (all before tax).
・Time deposits (1 year) at megabanks: Around 0.5% per year.
・Time deposits (1 year) at internet banks: Some banks offer over 1.5% per year, with the highest being 1.87% per year (subject to new account opening conditions).
・Mortgages (variable interest rate, new): Megabanks 1.33% / Regional banks 1.51% / Internet banks 1.60% (compiled by Mogecheck).
A ‘world with interest rates’ is a world where interest is properly applied to both the money you deposit and the money you borrow. It is a tailwind for those who deposit and a headwind for those who borrow. Therefore, let’s start by being aware of whether you are on the ‘depositing side,’ the ‘borrowing side,’ or both.
■ How much of a difference do savings make?
Let’s compare the interest earned when depositing 1 million yen into a time deposit for one year.
・Megabank time deposit / Interest rate (annual): 0.5% / Interest (before tax): 5,000 yen / Interest (after tax): approx. 3,984 yen
・Internet bank time deposit / Interest rate (annual): 1.5% / Interest (before tax): 15,000 yen / Interest (after tax): approx. 11,953 yen
・Internet bank (highest level, conditional) / Interest rate (annual): 1.87% / Interest (before tax): 18,700 yen / Interest (after tax): approx. 14,901 yen
※ Interest is subject to a tax of approximately 20.315%.
Even with the same 1 million yen, there is a difference of about 10,000 yen per year depending on the bank where you deposit it. However, many of the higher interest rates are limited to new account holders and are subject to conditions regarding the deposit period and amount. Before applying, please be sure to check the latest conditions on each bank’s official website. Note that for deposits, up to 10 million yen in principal and its interest per financial institution are protected by deposit insurance. If you are depositing a large amount, please consider splitting it across different institutions.
■ What is the current status of government bonds for individuals?
Next, let’s look at government bonds for individuals, which are attracting attention as being ‘safe and offering higher interest rates than deposits.’ The October offering period runs until Friday, October 30th, which is eight days from today.
・Floating 10-Year / Interest Rate (before tax): 2.05% / How interest is determined: Reviewed every six months. If interest rates rise in the future, the interest received will also increase / Recommended for: Those who believe interest rates will continue to rise and those who can hold them for a long time
・Fixed 5-Year / Interest Rate (before tax): 2.39% / How interest is determined: The same rate until maturity / Recommended for: Those who want to lock in the current higher interest rate for five years
・Fixed 3-Year / Interest Rate (before tax): 2.07% / How interest is determined: The same rate until maturity / Recommended for: Those who plan to use the money within three years
Let’s calculate the interest for holding 1 million yen for one year.
・Floating 10-Year (2.05%) / Interest (before tax): 20,500 yen / Interest (after tax): approx. 16,335 yen
・Fixed 5-Year (2.39%) / Interest (before tax): 23,900 yen / Interest (after tax): approx. 19,045 yen
【Points to keep in mind】
・The issue date is November 16th. Even if you apply, you will not receive cash back immediately.
・In principle, you cannot convert to cash during the first year after issuance.
・After one year, you can convert to cash at any time. However, an amount equivalent to approximately 80% of the interest for the two most recent periods (before tax) will be deducted. The principal will not be reduced.
・Interest is subject to a tax of approximately 20.315%, and tax-exempt systems like NISA cannot be used.
・The interest rate for the ‘Floating 10-Year’ is reviewed every six months. If interest rates fall, the interest you receive will also decrease.
Government bonds for individuals are very safe products where the government guarantees the principal. However, it is important to understand in advance that ‘you cannot move the money for one year’ and ‘it will not grow significantly.’
■ For those with a mortgage
I have been talking about the ‘depositor’ side so far, but I think those who have a mortgage with a variable interest rate are concerned. In October, following the Bank of Japan’s interest rate hike, many banks raised their variable interest rates for new borrowers.
The reflection of interest rates for those who have already borrowed generally involves a time lag. Following the revision of the short-term prime rate, it is common for this to be reflected at the time of the semi-annual review (it is reported that this often happens around April of next year). Rules vary by bank, so please check your own contract.
For reference, I have calculated how the monthly repayment amount changes depending on the interest rate, assuming a loan of 30 million yen and a repayment period of 35 years (assuming the interest rate remains the same throughout).
・1.0% / Monthly repayment (estimate): approx. 84,700 yen / Difference from 1%: –
・1.5% / Monthly repayment (estimate): approx. 91,900 yen / Difference from 1%: approx. +7,200 yen
・2.0% / Monthly repayment (estimate): approx. 99,300 yen / Difference from 1%: approx. +14,600 yen
・2.5% / Monthly repayment (estimate): approx. 107,200 yen / Difference from 1%: approx. +22,500 yen
The idea is that for every 1% increase in interest rates, your monthly repayment will increase by more than 10,000 yen. Even if you think, ‘It won’t go up that much,’ it is reassuring to check once whether your household budget could withstand it if it did.
■ Think about where to ‘place’ your money based on its purpose
Just because interest rates are rising, there is no need to act in a panic. What I tell my clients is the concept of ‘dividing where you keep your money based on when you will use it.’
・Emergency funds (6 months to 1 year of living expenses) / When to use: Anytime / Recommended placement: Ordinary savings or deposits that can be withdrawn immediately. Online banks with higher interest rates are also an option.
・Money to be used within a few years (education expenses, car, renovations, etc.) / When to use: 1 to 5 years / Recommended placement: Time deposits, individual government bonds (fixed). Focus on ensuring the principal does not decrease.
・Money not to be used for 10 years or more (retirement funds, etc.) / When to use: 10 years or more in the future / Recommended placement: Long-term asset management using NISA, etc. My stance is simply ‘cash’ and ‘All Country (global stocks).’
・Mortgage repayments / When to use: Monthly / Recommended placement: If you have room in your budget, consider early repayment. Prepare for rising interest rates.
I approach my clients with the philosophy that insurance should be kept to the bare minimum and asset management should be kept simple. Now that interest rates are rising and the appeal of savings and government bonds is increasing, please take another moment to organize ‘what the money is for.’
■ 5 checks you can do starting today
・① Divide your savings by purpose: Try dividing them into three categories: living expenses, money to be used within a few years, and long-term money.
・② Review your bank’s interest rates: Check if you have money lying dormant in an ordinary savings account. However, be sure to carefully check the details of conditional interest rates.
・③ If you are considering individual government bonds, do so by October 30th: They will be issued on November 16th. Understand that you cannot move them for one year before proceeding.
・④ Check your mortgage interest rate and the rules for reviewing it: If you have a variable interest rate, calculate ‘how much your monthly payment will increase if the interest rate rises by 1%’.
・⑤ “Do not rush to move everything”: Do not be swayed by campaigns or news. If you are unsure, consult an expert.
■ Summary
・Interest rates are showing upward movement in deposits, government bonds, and mortgages. A “world with interest rates” is a tailwind for savers and a headwind for borrowers.
・For deposits, there can be a difference of about 10,000 yen per year on the same 1 million yen at online banks with higher interest rates. However, be sure to check the conditions. Deposit insurance covers up to 10 million yen in principal per financial institution, plus interest.
・Government bonds for individuals (October offering) are available until October 30. They will be issued on November 16, and in principle, they cannot be converted to cash for one year. Interest is subject to tax.
・For mortgages, variable interest rates are trending upward. As a rough guide, if interest rates rise by 1%, there will be a difference of about 15,000 yen per month on a 30 million yen, 35-year loan (approximately 14,600 yen when rising from 1.0% to 2.0%).
・Divide where you keep your money based on “when you will use it,” and think about it simply without rushing.
A period of rising interest rates is both a new opportunity and a time when anxiety increases. However, there is no need to panic. It will be fine if you check things one by one and apply them to your own household finances. If you are ever unsure, please feel free to consult us.
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This article was compiled by independent financial planner Yamagishi, incorporating personal views, based on reports and publicly available information as of October 22, 2026. Interest rates, campaigns, and system details are subject to change. The figures are estimates based on reports and comparison sites, and the calculations are based on simplified conditions. This is not a solicitation for specific financial products or investment advice. For actual transactions, please check the latest information from each financial institution or the Ministry of Finance and make decisions at your own responsibility.
Reference Sites
https://www.nikkei.com/article/DGXZQOUB17AI80X10C26A9000000/
https://www.nikkei.com/article/DGXZQOUB114HR0R10C26A9000000/
https://moneiro.jp/media/article/government-bonds-individuals-future
【2026年10月版】メガバンクの定期預金金利ランキングTOP10｜金利上昇時代、1年ものはどこが高い？大手銀行の実力を徹底比較
https://mogecheck.jp/articles/show/51rzNy7XEJ5o4mQ6ZkVv