Survey says most Japanese homebuyers still choosing variable rate mortgages

The Japan Housing Finance Agency (JHF) has released the results of its latest housing loan usage survey, conducted in April 2025.

The survey targeted 1,397 individuals aged 20 to 69 who had taken out a mortgage between October 2024 and March 2025, shedding light on current trends in borrower behavior and expectations in Japan’s housing loan market.

A Wix text to AI image using the prompt "a smiling Japanese person signing a home loan contract" using a portrait filter. All rights reserved.

One of the most striking results was the continued dominance of variable-rate loans. Despite increasing concerns over rising interest rates, 79.0% of respondents opted for variable-rate mortgages - up from 77.4% in the previous survey.  

By comparison, only 12.2% selected fixed-period loans, and just 8.8% chose fully fixed-rate mortgages.

Expectations for future rate hikes are growing:

• 65.7% of respondents said they expect interest rates to rise within the next year (up from 62.9%).

• 23.2% said rates will stay the same.

• Only 1.8% anticipate a decline.

Interest rates on newly issued mortgages continue to cluster in the low range, but there are signs of an upward shift.

• 45.2% of borrowers secured loans with interest rates between 0.5% and 1.0% (up from 36.4%).

• 26.6% reported rates at or below 0.5% (down from 37.1%).

Loan repayment terms show a subtle shift toward longer durations.

• 45.8% of borrowers chose repayment periods over 30 years but no longer than 35 years (a slight decline from 48.6%).

• The share of borrowers with terms between 20 and 35 years dropped 6.2 points to 60.9%.

• Meanwhile, those opting for longer terms of 35 to 50 years increased by 4.6 points to 25.5%.

Loan-to-value (LTV) ratios remained relatively steady, with a slight upward trend in high-LTV borrowing:

• 26.5% of borrowers took out loans covering 90% to 100% of the property value (up from 25.1%).

Debt-service ratios, which measure the proportion of income spent on loan repayment, were largely unchanged:

• 24.3% of respondents reported monthly burdens between 15% and 20% of their income, nearly flat from 24.9% previously.

Inflation and rising home prices are prompting many borrowers to adjust their plans.

• 56.7% said they made changes to their home-buying strategies in response to economic conditions.

• 22.8% increased their budgets and took out larger loans.

• 14.7% reconsidered their choice of location.

• 13.2% accelerated the timing of their purchase.

Taken together, the findings suggest that while expectations for higher interest rates are becoming more widespread, most borrowers continue to favor variable-rate mortgages - likely due to their comparatively low initial costs.

At the same time, a growing number of homebuyers are stretching loan terms and adjusting their financial strategies in response to broader economic pressures.

Further Reading:

Japan Housing Finance Agency April 2025 Loan Usage Survey (Japanese only; presents more data than outlined above)

Source:

R.E. Port News (Japanese only)