The official “Flat 35” home mortgage rate dove below the 1.00% level for the first time in July and has remained below the historic mark in August, as announced by the Japan Housing Financing Agency (JHFA). Flat 35 loans are among the most widely used home mortgage products 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.
For August 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 0.900% and 1.340%. In July, the lowest rate offered was 0.930% and in June, the lowest rate offered was 1.100%.
The majority of financial institutions which offer Flat 35 loans are offering rates of 0.900% 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 between 1.340% and 2.010%.
The majority of financial institutions which offer Flat 35 loans are offering rates of 1.340% % 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 August 2016 rate is 0.830% to 1.500%, with the majority of banks offering the lower-end 0.830% rate. In cases where the borrower is financing more than 90% of the purchase, the August rate is between 1.270% and 1.940%, with most banks offering the lower-end rate.
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 August rate is between 1.440% and 1.940%, with the majority of banks offering 1.690%. Where the amount being financed is more than 90%, the rate is between 1.880% and 2.380%, with most banks offering 2.130%.
For comparison, according to Bankrate‘s survey of national large lenders in the United States, the 30-year- fixed-rate mortgage averaged 3.56% as of August 11, 2016.
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 June’s post on Flat 35 rates, please see: Flat 35 Mortgage Rate Up for First Time in 8 Months
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