Japanese Prime Minister Shinzo Abe’s pledge to end 15 years of deflation has prompted the nation’s biggest banks to raise mortgage rates, mobilizing people like Karin Abe to buy a home four years earlier than he had planned.
“I wanted to take advantage of the low rate before it started going up,” said Abe, 26, who in April bought a three-bedroom apartment for about 30 million yen ($316,455) in Tokyo’s Edogawa ward, named for a river running through it. “I’ve always thought buying a house is something that I would do after I turn 30, but the timing just seemed perfect and I wanted to save money.”
Banks including Mitsubishi UFJ Financial Group Inc. (8306) raised mortgage rates for a second straight month after the Bank of Japan unveiled a plan in April to target a 2 percent inflation rate in two years, leading to an increase in benchmark bond yields. That’s boosting developers such as Mitsubishi Estate Co (8802). and Mitsui Fudosan Co., with visitors to their showrooms and apartment sales surging in May from a year ago.
“When interest rates are on the rise, housing demand tends to increase because buyers want to acquire homes before rates go up,” said Hidetaka Yoneyama, a senior researcher at Fujitsu Research Institute (KJJITZ) in Tokyo. “Now is the time we will see such last-minute buying demand.”
An unprecedented monetary easing under Bank of Japan Governor Haruhiko Kuroda and increased government spending under Abe’s leadership have helped bolster consumer confidence, spurring Japanese stocks to world-beating gains through May as the yen slid to a more than four-year low.
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