Did Your Variable Mortgage Rate Just Rise? What September's Hike Means for You

On 31 August 2026, MUFG Bank and Sumitomo Mitsui Banking Corporation both announced they would raise their variable-rate 'most-favoured' mortgage rate by 0.25% for September — to 1.195% at MUFG and 1.525% at SMBC. According to reports from Nikkei, Yomiuri Shimbun and other outlets, this marks the first actual increase in either bank's benchmark rate since March, a gap of about six months. The move follows the Bank of Japan's decision at its June policy meeting to raise the policy rate to around 1.0%, reported as roughly a 31-year high. Yomiuri also noted that other banks may follow, though that remains a media forecast rather than an official announcement from any specific lender.

For anyone already repaying a variable-rate loan, or about to sign one, the real question is when and how that 0.25% actually reaches your monthly payment. Terms like the 'five-year rule' and the '125% rule' come up often, but they are not automatically part of every loan. This article works through what is worth checking now, including when refinancing to a fixed rate might be worth considering. For decisions specific to your loan, please confirm with your lender.

Does a 0.25% rate hike change your payment right away?

At most lenders, the 'most-favoured rate' is a benchmark for the strongest-credit borrowers; the rate actually applied to you is that benchmark plus or minus a lender-specific adjustment set at the time you borrowed. A rise in the benchmark does not mean every borrower's applied rate moves by the same 0.25 points.

Many variable-rate products also separate the review of the interest rate from the review of the repayment amount. The rate itself is often reviewed on a shorter cycle, such as every six months, while the monthly payment amount may only be reviewed once a year, or even less often depending on the product. That means a rate increase can already be affecting how much of each payment goes to interest, even before your listed repayment amount changes.

Do the 5-year and 125% rules apply to every loan?

Some variable-rate products only review the repayment amount once every five years, and cap any increase at 125% of the previous payment when they do. This is not a uniform legal requirement — it is a feature each lender designs into specific products. Whether your existing or prospective loan includes this rule is something to confirm in the product disclosure document or your loan contract.

Even where this rule applies, there is a catch worth understanding. If rates rise while your payment amount is frozen, a larger share of each payment goes toward interest rather than principal, so your balance falls more slowly than you might expect. In some products, interest can even exceed the fixed payment, with the shortfall added to your outstanding principal as 'unpaid interest'. An unchanged payment amount is not the same thing as an unchanged burden.

Is it worth refinancing into a fixed rate now?

Whether refinancing pays off depends on your remaining loan term, outstanding balance, the rate gap between your current loan and the refinanced one, and the fees involved (administrative charges, registration costs, and so on) — there is no single right answer. As a rough guide, refinancing tends to make more sense the longer your remaining term and the larger your outstanding balance, even when the rate gap itself is modest.

In practice, the reliable approach is to get repayment simulations and fee estimates from more than one lender and compare the total cost against simply continuing your current loan. Don't rush into a refinance purely because rates 'seem to be rising' — compare the full picture, fees included.

What should foreign residents with a mortgage check after this hike?

Conditions such as your residency status renewal timing and length of continuous employment are generally set by lenders as underwriting criteria, independent of where rates stand. But as rates rise, your debt-to-income ratio (annual repayment as a share of annual income) tends to have less room to spare, so it is worth reviewing your household finances around the time your residency status comes up for renewal.

Separately, the US Treasury Secretary was reported to have said on 31 August that the Japanese government and the Bank of Japan would take measures that lead to a stronger yen. That is a market-facing comment rather than a confirmed policy decision, and it does not settle where rates or the exchange rate are headed — but it is useful context for why the rate environment feels unsettled right now.

Inside the SUMIMOTO Hub app, a 24-hour AI advisor explains how to read your repayment schedule and how rate reviews work, in multiple languages. When rates are moving, checking your notices and contract terms early matters more than usual. For decisions on refinancing or your repayment plan, please confirm with your lender or a licensed tax professional.