Variable or Fixed? How to Choose a Mortgage as Banks Diverge on Rates

In September 2026, mortgage rates in Japan stopped moving in lockstep. MUFG Bank and Sumitomo Mitsui Banking Corporation, among other megabanks, raised their variable rates, while Mizuho Bank and Resona Bank held last month's levels. Flat 35 and 10-year fixed rates rose across several lenders at the same time. Headlines that simply say 'rates went up' can make this sound uniform, but in practice lenders are making different calls right now.

For anyone about to buy, what matters more than a 0.1-point gap on any single day is being able to judge, from your own household finances, whether variable or fixed suits you better. This article works through how the two types differ, what to watch for if you choose Flat 35, and how switching after signing actually works. For rates and underwriting specific to your case, please confirm directly with the lender you're considering.

How do variable and fixed rates actually differ?

A variable rate is reviewed periodically in line with market conditions. Many products review the rate itself every six months, while the monthly payment amount may only change once a year or on an even longer cycle. The starting rate is usually set lower than a fixed rate, but if rates rise over the life of the loan, so does the interest burden.

A fixed rate stays the same for a set period, or in some cases until the loan is fully repaid. The best-known example is Flat 35, a product where the Japan Housing Finance Agency partners with private lenders to keep the rate unchanged from the first payment to the last. That makes household budgeting more predictable, but the starting rate tends to be set higher than a variable product's.

What does it mean that banks are now split?

What September 2026's moves show is that the direction of rates is no longer settled in one direction. Megabanks' variable-rate increases are widely linked to Bank of Japan policy rate moves, yet Mizuho and Resona chose to hold steady in the same environment. Even under the same market conditions, funding costs and competitive strategy differ from lender to lender, so a split response like this isn't unusual.

There is one practical takeaway here: don't pick a lender based on a single headline about one bank raising or holding its rate. Get quotes from several lenders you're actually considering and compare them side by side.

How do you judge whether variable or fixed suits you?

There's no single right answer, but three factors are practical to weigh. First, can your household absorb a rate increase during the loan term (how much headroom does your debt-to-income ratio have)? Second, how long is your remaining term — the longer it is, the longer you're exposed to rate movements. Third, is your priority a locked-in payment amount you can plan around, or a lower starting payment?

When buying a home in Japan on a residency status, underwriting generally sets its own conditions around the type and length of your residency status and your length of continuous employment. That's a separate question from which rate type to choose, but since these conditions vary by lender, it's worth confirming them regardless of whether you lean variable or fixed.

What should you know before choosing Flat 35?

Flat 35 offers the reassurance of a locked-in payment, but it has its own caveats. Because the rate is fixed at the level in effect when you borrow, the timing of your contract directly determines your total repayment. It's also worth knowing that the rate rises once your loan-to-value ratio (the loan amount relative to the property price) exceeds 90%, which matters for financial planning.

For homes meeting certain technical standards, such as energy efficiency criteria, a temporary rate discount for an initial period is sometimes available. Eligibility depends on the property and the timing, so confirm with your lender or the Japan Housing Finance Agency whether the property you're considering qualifies.

Can you switch from variable to fixed after signing?

In most cases, there's no built-in 'switch' from a variable-rate contract to fixed within the same loan — in practice, you refinance into a different lender or product. Refinancing carries costs such as administrative fees and registration charges, so it's essential to compare the total cost, fees included, not just the headline rate gap.

As a rough guide, refinancing tends to pay off more clearly the longer your remaining term and the larger your outstanding balance. Don't decide in a hurry just because rates 'seem to be rising' — get simulations from more than one lender and compare against simply continuing your current loan.

Inside the SUMIMOTO Hub app, AI valuation can help simulate your financing plan, and a 24-hour AI advisor explains how variable and fixed rates work, and Flat 35's conditions, in multiple languages. For your final choice of rate type and underwriting conditions, please confirm with the lender you're considering.