[Finance and Economy] Long-term interest rates reach the 3% range. How the highest level in about 30 years will impact mortgages and savings
The yield on 10-year government bonds has reached the 3% range
In September 2026, the yield on newly issued 10-year Japanese government bonds, a benchmark for long-term interest rates in Japan, reached the 3% range. This is the highest level in about 30 years. Although it had risen to the 2.9% range in August, it surpassed the 3% milestone as additional rate hikes were largely priced in ahead of the Bank of Japan’s Monetary Policy Meeting in September. Long-term interest rates are figures that indicate “how much interest you receive when lending money for up to 10 years.” The fact that this is rising means that
the price of money in society is increasing. Everything from fixed mortgage rates and corporate borrowing rates to government bond interest payments is determined based on this figure.
The reasons for the rise can be divided into three categories
Koichi Fujishiro of the Dai-ichi Life Research Institute categorizes this rise in long-term interest rates into three factors.
1. Rise in overseas interest rates Interest rates are clearly rising not only in the United States but also in Germany. The U.S. 10-year yield is eyeing 4.8%, and the 30-year yield is hovering above 5%. It is important to note that the rise in Japanese interest rates is not a phenomenon unique to Japan. A common background factor is that the rise in crude oil prices since March 2026 has pushed up inflation rates, leading to increased expectations of rate hikes by central banks in various countries.
2. Growing expectations of BOJ rate hikes This is considered the most important factor. The “1-year interest rate two years from now,” which indicates the terminal rate expected by the market, has risen to around 2.5%. This means that “rate hikes every three to four months will continue for about the next two years, and about six rate hikes are being priced in.”
3. Reaction to fiscal policy Reports that the budget request for fiscal year 2027 would be on the scale of 143 trillion yen were viewed as a factor. However, he states that it is somewhat unreasonable to attribute the main cause of the interest rate rise so far to fiscal factors, and that it can be largely explained by monetary policy moves in response to wages and prices.
A return from the “abnormality of deflation” to a “world with interest rates”
I would like to cite a perspective that is often overlooked. Because we have been in ultra-low interest rates under deflation for so long, we perceive normal interest rates under inflation as “abnormal”—he points this out. In other words, what is happening now is not an “abnormal rise in interest rates,” but a
return to a state where interest is earned. From this viewpoint, what needs to be judged is not “whether interest rates will rise,” but “how to structure things in a world of higher interest rates”.
There are two directions for the impact on households
Rising interest rates are not bad news for everyone. It is a headwind for borrowers and a tailwind for savers.
Mortgages Both variable and fixed interest rates have entered a rising phase. Fixed interest rates, in particular, are directly affected because they are linked to long-term interest rates. Variable interest rates have also seen an increase in products entering the 1% range, and “0% range” options are no longer seen. For those who have borrowed, it is worth checking: (1) the current applicable interest rate, (2) the timing of interest rate reviews, and (3) when and how much the monthly repayment amount will change. The specific interest rate level
varies by financial institution and changes every month. This article does not show figures for specific banks. Please be sure to check the basis for your judgment on the official website of your lender or the financial institution you are considering.
Savings and government bonds for individuals Conversely, there are benefits for those who save. If long-term interest rates rise, the applicable interest rate for government bonds for individuals will also rise. In addition, interest rates on ordinary deposits are also trending upward. Since the state of “no increase even if you deposit” has continued for a long time, the fact that it has become meaningful to compare deposit destinations is a major change.
Three points to check today
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Your loan type and applicable interest rate: Is it variable or fixed? If it is fixed, for how many years? The impact will be completely different here.
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Timing of interest rate reviews: Even with variable interest rates, reviews are conducted at times such as twice a year. Check when that is.
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Comparing deposit and government bond interest rates: If you are going to deposit money, the interest rate gap has now reached a level that cannot be ignored.
Interest rates are not just “numbers seen in the news,” but numbers that appear in your household budget in the form of monthly loan repayments and interest on deposits. The 3% milestone is a perfect time to start checking them.