Japan’s low interest rates have long drawn the attention of overseas property buyers. Now the Bank of Japan’s policy rate has risen to around 1.25%, and Nikkei reports that variable-rate mortgages may become more expensive. Yet Japan’s rate remains below the US Federal Reserve’s September target range of 3.75%–4%. That international contrast is striking, but neither central-bank rate is a mortgage rate. To understand what borrowing in Tokyo costs, buyers need to look at the rates and conditions lenders actually offer.
There is an important qualification for international readers: where you live and what you plan to do with the property affect which loan you can seek. MUFG’s published mortgage-rate programme generally requires a foreign applicant to hold permanent residency. SMBC Trust Bank PRESTIA says foreign nationals living in Japan can apply without permanent residency, subject to its other requirements, including annual income above ¥10 million. Neither bank’s residential mortgage table below is a financing quote for a non-resident purchasing a rental investment. PRESTIA offers a separate investment-property loan; applicants should discuss the product that matches their intended use.
What do the banks actually advertise?
These are September 2026 initial borrowing rates after the stated plan discounts for new residential purchases, not banks’ higher base rates. Both banks offer 35-year loan terms. PRESTIA’s A Plan has an administrative fee of 2.2% of the loan amount; the MUFG programme shown also lists a 2.2% borrowing fee. The rate a borrower receives depends on eligibility and screening.
| Bank and residential plan | Variable rate | Initial 10-year fixed rate | Fixed for the full 35 years |
|---|---|---|---|
| MUFG: new borrowing | 1.195% | 3.63% | 4.30% |
| SMBC Trust Bank PRESTIA: A Plan | 1.46%–2.65% | 3.41%–4.41% | No full-term fixed option listed |
The PRESTIA figures are its advertised A Plan range after the plan discount, before any separately conditional extra discount on the variable rate. Its variable product is reviewed annually; the 10-year fixed rate applies for the first ten years, after which the rate is reset under the bank’s terms. MUFG’s 10-year rate is also fixed only for the initial decade. MUFG’s 4.30% rate, by contrast, applies to its 31–35-year full-term fixed product. PRESTIA’s September figures apply to contracts signed that month and funds drawn by the end of October; MUFG labels its rates for borrowing in September. These rates can change and are not individual loan offers.
The table makes Nikkei’s main point concrete. A variable mortgage starts at a lower advertised rate than a fixed one, but the future payment is less certain. A 10-year fixed loan offers certainty for a decade, not for the whole 35-year repayment period. A full-term fixed loan locks in a rate for the loan’s duration, at a higher initial rate in MUFG’s September example. Comparing only the first payment would miss that difference.
The fee also matters. On a ¥50 million loan, a 2.2% borrowing fee is ¥1.1 million before other purchase expenses. A reader comparing two advertised rates should ask each bank for a complete illustration of initial cash costs, monthly payments and what happens when an initial fixed period ends.
The property price matters as much as the rate
Tokyo Kantei’s August 2026 report puts the asking price, adjusted to a 70-square-metre used condominium, at ¥126.77 million across Tokyo’s 23 wards. That was down 0.4% from July, its third consecutive monthly decline. These are advertised prices rather than completed sale prices, and the August data cannot show that September’s Bank of Japan decision caused the decline.
A modest change in asking prices does not tell a buyer what they will pay for a particular home. Building condition, location and ongoing expenses vary. For a condominium, a homeowner’s budget should include building management fees and monthly repair reserve contributions alongside mortgage payments. Property taxes also need to be budgeted for, even though they are not paid as part of the monthly mortgage instalment. The amount of cash available for a deposit changes how much the buyer needs to borrow; a lower interest rate on a large loan can still produce a demanding monthly payment.
For someone who earns or holds savings in dollars, yen movements can also change the dollar cost of the deposit and future payments. This is why the US policy-rate comparison is a useful hook but a limited guide to affordability: the relevant numbers are the purchase price, an available loan offer and the costs of owning that property.
A different calculation for investors
A buyer planning to rent out the property needs to check investment financing rather than assume that the residential rates in the table apply. They also need a realistic rent estimate. Vacancy, management charges, repairs and taxes reduce the income available to service a loan. Tokyo Kantei’s asking-price report helps describe the purchase market; it does not establish the rent or return on a specific apartment.
For a prospective owner-occupier, a practical next step is to ask eligible lenders for illustrations showing payments at the offered variable rate, after a further rate increase, and under an available fixed product. An investor should request terms for the appropriate investment loan and test those payments against a conservative rental budget. Japan may still look low-rate beside the US, but the decision turns on the financing available to the buyer and the numbers for the property they intend to purchase.
