For those with variable interest rates, even if your repayment amount is the same, you cannot rest easy. How to check in 10 minutes on a Sunday if your principal is not decreasing
Good morning! How are you spending your Sunday morning?
“I heard mortgage interest rates have gone up, but my repayment amount hasn’t changed since last month. So, this doesn’t apply to me, right?”
If you thought that, please read today’s article to the end. In fact, for those currently repaying with a variable interest rate, “now, while the repayment amount hasn’t changed” is the time when it is easiest to overlook the situation.
1. First, let’s check this month’s numbers
In October 2026, the most common interest rate for the all-period fixed-rate “Flat 35” became 3.83% per annum. This is an increase of 0.37 points in just one month from 3.46% the previous month (for a repayment period of 21 to 35 years, a loan-to-value ratio of 90% or less, and including the new organization’s group credit life insurance).
Comparing a 30 million yen loan over 35 years, the difference between 3.46% and 3.83% results in a difference of about 6,500 yen in monthly repayments and about 2.73 million yen in total repayments over 35 years.
“But isn’t Flat 35 for people who are borrowing from now on?” you might think. That is correct; the interest rate for those who have already borrowed at a fixed rate will not change.
The problem is for those who are currently repaying with a variable interest rate.
2. The reason why the principal decreases more slowly even though the repayment amount is the same
Many financial institutions’ variable interest rate mortgage loans have the following mechanisms (*this varies depending on the contract details).
• The applicable interest rate is reviewed every six months
• The monthly repayment amount is fixed for five years (the so-called “5-year rule”)
• Even with the review after five years, the increase in the repayment amount is limited to 1.25 times the previous amount (the so-called “125% rule”)
Thanks to this mechanism, you can prevent your household finances from suddenly becoming difficult even if interest rates rise. It is a very helpful mechanism.
However, there is a pitfall.
Even if the repayment amount is the same, its “breakdown” has changed.
For example, suppose the interest rate for someone with a balance of 25 million yen increases by 1%. By simple calculation, the interest per month increases by about 20,800 yen (25 million yen × 1% ÷ 12 months). While the repayment amount is fixed, the money going toward principal repayment is calculated to decrease by that amount.
In other words, “repayment amount does not change” does not mean “nothing is happening.” It is possible that “the repayment amount does not change, but the principal is decreasing more slowly.” In some cases, it is even possible under the mechanism for interest to exceed the repayment amount, resulting in “unpaid interest.”
3. Three checks you can do in 10 minutes on a Sunday
You don’t need difficult calculations. Today, have your repayment schedule or bank app ready and try checking just these three things:
1. What is your current applicable interest rate in %? (Are you assuming it’s still the same interest rate as when you borrowed?)
2. What is the breakdown of principal and interest in your most recent repayment?
3. How much is left on your balance and remaining repayment period?
If you know these three things, the next action you should take will become clear.
So, if interest rates continue to rise like this, what will happen to your repayments? Should you make early repayments, or should you not? From what point should you start considering refinancing?
In the second half, we will organize those judgment criteria while using specific calculation tables.