The “Flat 35” rate for home mortgage loans for May 2016, was just announced by the Japan Housing Finance Agency (JHFA), and it has again hit a historic low, dropping to 1.080% (down 0.110% compared to April), the fifth consecutive month in which the rate has fallen. Flat 35 loans are one of the most widely used home mortgage products in Japan.
Despite the Bank of Japan’s decision to keep rates unchanged in its April 27th policy meeting, the JHFA has allowed the official rate for these home buyer-friendly mortgages to further decrease. Japanese media has reported that the effect of falling mortgage rates has especially goosed the market for re-financing loans.
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.
For May 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 1.080% (a decrease of 0.110% compared to April) and 1.770% (a drop of 0.050% compared to April).
As mentioned in the lead, 1.080% is the lowest rate ever offered for Flat 35 loans.
The majority of financial institutions which offer Flat 35 loans are offering rates of about 1.080% this month for LTVs of less than 90%.
LTVs Greater Than 90%
For Flat 35 loans where the loan amount is over 90%, the rate is 1.520% (a decrease of 0.110% compared to April) and 2.210% (a decrease of 0.050% compared to April).
The majority of financial institutions which offer Flat 35 loans are offering rates of about 1.520% 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 May 2016 rate is 0.960% (down 0.060% v. April) to 1.650% (unchanged from April), with the majority of banks offering the lower-end 0.960% rate. In cases where the borrower is financing more than 90% of the purchase, the May rate is between 1.400% (down 0.060% v. April) and 2.090%, with most banks offering the lower-end rate.
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 April rate is between 1.840% and 2.340% (an decrease of 0.020% compared to April), with the majority of banks offering 2.090%. Where the amount being financed is more than 90%, the rate is between 2.2800% and 2.780% (a decrease of 0.020%), with most banks offering 2.530%.
For comparison, according to Bankrate, the benchmark 30-year- fixed-rate mortgage in Los Angles fell to 3.94% from 3.95% in the first week of May, based on Bankrate.com’s national survey of large lenders.
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.
For last month’s post on Flat 35 rates, please see: April Flat 35 Mortgage Rate Hits Another Historic Low
Photo: House in Nara, Japan