Packaging/Japan’s interest rate hike: Older people with large deposits make money and young people lose money?

Japan If interest rates rise, where are youth likely to suffer the most? The Financial Times reported that the Bank of Japan’s policyinterest rate It has increased to 1.25%, which is the highest level in 30 years. Older people with larger savings can expect to earn higher interest, but younger people are facing greater difficulty in purchasing a home, increased repayment burden and potential barriers to salary growth.

Housing prices in central Tokyo will rise 8.3% in 2025, and young people’s wages will not be able to keep up. Sota Takano, senior economist at Itochu Research Institute, pointed out that in the past, it was difficult to buy a house mainly because housing prices rose too quickly; Future increases in mortgage interest rates will also increase the burden.

The average interest rate of floating mortgage loans in Japan is about 1.3% to 1.6%, which is much lower than the 3.8% of 35-year fixed mortgage loans, which attracts borrowers to choose floating interest rates. However, the Cabinet Office estimates that if mortgage interest rates increased by one percent, the average mortgage borrower aged 30 would have to pay an additional 240,000 yen in interest per year, which is about 4% of disposable income.

Many banks offer equal monthly payment arrangements for five years, but as the interest increases, the monthly principal payment becomes smaller. Some buyers have extended their loans to as long as 50 years, but banks have begun tightening review standards for such loans in recent months.

Nissan said rising funding costs have forced lenders to raise interest rates. Second-hand boutique store Allu has reduced the interest-free installments of some shopping loans from 60 to 24, so consumers will have to pay off the loan in less time.