January Flat 35 Rate Drops for First Time in Two Months

The Japan Housing Finance Agency (JHFA) recently announced the official January 2016 rate for “Flat 35” and “Flat 50” home mortgage loans that financial institutions can charge for these types of loans, designed to make homeownership possible for many people in Japan.

Flat 35

Flat 35 loans are fixed interest loans with terms of 35 years, offered by a wide variety of Japanese banks, and securitized by the JHFA. The JHFA is a Japanese public corporation similar to Fannie Mae in the US or the Canada Mortgage and Housing Corporation.

In some good news for consumers, the JHFA’s announced rates have decreased for the first time in two months.

For January 2016, the interest rate for Flat 35 loans where the term is 21 years or above and less than 35 years, and where the loan amount is 90% or less than the price of the property, is between 1.540% (a drop of 0.01% compared to December) and 2.090% (also a drop of 0.01% compared to December). The majority of financial institutions which offer Flat 35 loans are offering rates of about 1.540% this month for LTVs of less than 90%.

For Flat 35 loans where the loan amount is over 90%, the rate is 1.670% (a decrease of 0.01% compared to December) and 2.220% (also a decrease of 0.01% compared to December). The majority of financial institutions which offer Flat 35 loans are offering rates of about 1.670% this month for LTVs of more than 90%.

Rate for 20-Year Payback Period

For loans where the payback period is 20 years or less and where the loan amount is 90% or less, the January 2016 rate is 1.270% to 1.890%, with the majority of banks offering the lower-end 1.270% rate. In cases where the borrower is financing more than 90% of the purchase, the January rate is between 1.400% and 2.120%, with most banks offering the lower-end rate. This is also a drop of 0.01% compared to December.

Flat 50

For Flat 50 loans where the term is 36 years or more and 50 years or less, and where the amount being financed is 90% or less, the January rate is between 2.010% and 2.5100% (a decrease of 0.05% compared to December), with the majority of banks offering 2.260%). Where the amount being financed is more than 90%, the rate is between 2.140% and 2.640% (a decrease of 0.05% compared to December), with most banks offering 2.390%.

For comparison, according to Yahoo Finance, today’s average rate for a 30-year fixed rate mortgage originating in Los Angeles, California is 3.96%, down from 3.98% last week.

Qualifying for a Mortgage as a Foreigner

For more information on qualifying for a home mortgage loan as a foreigner in Japan, please see our articles on Home Mortgage Loans for Foreigners in Japan, Basic Requirements for Getting a Mortgage as a Foreigner in Japan, and this Home Buyer Profile.

Many Japanese banks do require non-Japanese home loan applicants to be married to a Japanese national or to have permanent residency (PR), but there are some banks that will lend to foreign nationals who have a working visa and a certain minimum annual income level, usually about 7 million yen, as explained in this article on Investing in Residential Apartment Buildings in Japan.

Source: SUUMO (Japanese)

Photo: Tilt shift of Sensoji (temple) taken from the observation deck of Tokyo Skytree.