Japan Flat 35 rate reaches a record 3.83 percent in October 2026
The Japan Housing Finance Agency published its October Flat 35 rates on October 1st, with the most common rate for 21- to 35-year loans at a loan-to-value ratio of 90% or below rising to 3.83%.
That is the highest level under the current Flat 35 framework and extends a three-month rise in long-term fixed borrowing costs.
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Flat 35 is a government-supported, fully fixed mortgage offered by private lenders in partnership with the Japan Housing Finance Agency (JHF), rather than a market-wide Japanese mortgage rate.
Flat 35 reaches 3.83% after three months of increases
JHF lists October’s rate range for 21 to 35 year Flat 35 loans at 90% LTV or below as 3.83% to 5.84%, with 3.83% the most common rate offered by participating lenders.
The comparable rate was 3.46% in September, making October’s increase 0.37 percentage point in a single month.
The increase follows two earlier monthly rises:
July: 3.14%
August: 3.29%
September: 3.46%
October: 3.83%
That puts the most common rate 0.69 percentage point higher than three months earlier.
For terms of 15 to 20 years, the October rate is lower, with 3.51% the most common rate.
The 3.83% figure should not be seen as the rate paid by every Flat 35 borrower. Participating lenders offer rates within the published range, and qualifying borrowers may also receive separate JHF rate reductions.
What the higher rate can mean for monthly payments
The practical effect becomes clearer when the September and October rates are applied to a 35-year mortgage.
Amount borrowed | September at 3.46% (approx.) | October at 3.83% (approx.) | Monthly Increase (approx) | Additional Interest Over 35 Years (approx) |
¥40 million | ¥164,400 | ¥173,100 | ¥8,700 | ¥3.64 million |
¥60 million | ¥246,600 | ¥259,600 | ¥13,000 | ¥5.46 million |
¥80 million | ¥328,800 | ¥364,100 | ¥17,300 | ¥7.28 million |
These are illustrative equal principal-and-interest calculations. They exclude loan fees, taxes, insurance costs outside the assumed mortgage rate, maintenance, condominium management fees, repair reserves and optional prepayments.
The difference between Flat 35 and commercial bank mortgage lending
Flat 35 and commercial bank mortgages can both involve discounts from a headline rate, but the way those discounts are determined is different.
An earlier Patience Realty Intelligence article highlighting MUFG and SMBC outlined how a Japanese bank variable mortgage can be understood as a posted or base rate minus a preferential discount, producing the applicable rate offered to a qualifying borrower.
In September, for example, MUFG’s posted variable rate was 3.375%. A borrower receiving the full 2.18-percentage-point preferential discount would therefore pay an initial rate of 1.195%.
Those discounts are set by individual lenders and can depend on the bank’s product terms, credit assessment and underwriting policies. The criteria are not standardized across the market, and the applicable variable rate can still change over time.
Flat 35 works differently. The 3.83% October figure is the most common fixed rate offered by participating lenders for loans of 21 to 35 years at 90% LTV or below.
Separate JHF programs can then reduce that applicable fixed rate for borrowers or properties meeting specified criteria. Flat 35S, for example, provides temporary reductions for qualifying homes based on published standards such as energy efficiency and other housing-performance requirements.
Under the current system, qualifying combinations of JHF programs can reduce the rate by as much as 1 percentage point for the first five years.
The key distinction is that Flat 35 reductions are more standardized and tied to published program criteria, while commercial bank preferential discounts are set by individual lenders and depend more heavily on their own underwriting and pricing policies.
Fixed or variable now means a bigger affordability trade-off
Variable-rate mortgages remain much cheaper at the outset than long-term fixed borrowing, which helps explain why they have been popular with Japanese borrowers.
The trade-off is that variable borrowers retain exposure to future rate increases, while Flat 35 borrowers pay more upfront in exchange for certainty over scheduled repayments.
That distinction becomes more significant as borrowing costs rise. Recent increases in bank variable rates have reduced some of the advantage created by years of exceptionally cheap financing, while Flat 35 borrowers now face a higher cost to lock in rates for decades.
For households, the affordability question is whether income growth can keep pace with the combined burden of mortgage repayments and high property prices. Even where wages rise, higher debt-service costs can absorb part of that gain.
Further Reading:
Japan Housing Finance Agency - Flat 35 Rate Information (Japanese only)
Japan Housing Finance Agency - Flat 35S Rate Reduction Programs (Japanese only)
Patience Realty Intelligence - MUFG and SMBC raise variable mortgage rates by 0.25 percentage points
