The official “Flat 35” rate for home mortgage loans for April 2016, as just announced by the Japan Housing Finance Agency (JHFA), has hit another historic low, dropping to 1.190% (down 0.060% compared to March), the fourth consecutive month in which the rate has fallen. Flat 35 loans are one of the most widely used home mortgage products in Japan.
In Japan’s negative interest rate environment, there is heated competition among banks for consumers looking to re-finance and to originate new mortgages.
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 April 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 1.190% (a drop of 0.060% compared to March) and 1.820% (a drop of 0.060% compared to March). As mentioned in the lead, 1.190% 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 1.190% this month for LTVs of less than 90%.
For Flat 35 loans where the loan amount is over 90%, the rate is 1.630% (a decrease of 0.060% compared to March) and 2.260% (a decrease of 0.060% compared to March). The majority of financial institutions which offer Flat 35 loans are offering rates of about 1.630% 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 April 2016 rate is 1.020% to 1.650% (unchanged from March), with the majority of banks offering the lower-end 1.020% rate. In cases where the borrower is financing more than 90% of the purchase, the April rate is between 1.460% and 2.090%, with most banks offering the lower-end rate. This is a decrease of 0.050% compared to March.
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 1.860% and 2.360% (an increase of 0.080% compared to March), with the majority of banks offering 2.110%. Where the amount being financed is more than 90%, the rate is between 2.300% and 2.800% (an increase of 0.080%), with most banks offering 2.550%.
For comparison, according to Bankrate, the benchmark 30-year- fixed-rate mortgage in Los Angles fell to 4.00% from 4.09% in the last week of March, 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: Flat 35 Mortgage Rate Falls to 1.250% Lowest in History
Source: Japan Housing Finance Agency (in Japanese)