On February 27, Mitsubishi UFJ Bank and Sumitomo Mitsui Banking Corporation announced that they would raise variable interest rates on home loans starting March, following the Bank of Japan's interest rate hike in December. Both banks will increase their benchmark rate by 0.25%, raising it to 3.125%, which marks the highest rate since the reorganization of Mitsubishi UFJ Bank in 2006 and Sumitomo Mitsui Bank in 2001. Other major banks, including Mizuho Bank, are also expected to follow suit in increasing their rates.

With approximately 80% of home loan users opting for variable rates, this rise in interest rates is expected to significantly impact household budgets amidst soaring housing prices. The increased loan amounts due to higher property costs are putting additional financial strain on families. The repercussions of these changes are prompting a growing number of consultations for refinancing as borrowers seek to mitigate the financial burden brought on by rising rates.

The implications of this rise in interest rates are crucial for the Japanese economy, as families grapple with higher repayments while banks and financial institutions prepare for possible shifts in consumer behavior. These changes might hinder the housing market's recovery by making it more expensive for buyers to secure new loans or refinance existing ones, which could slow down transactions within the real estate sector and potentially lead to broader economic consequences in the long run.