[Sumitomo Mitsui Trust Bank, Ltd.] Will a “world with interest rates” come? Not coming? ~What would you do when mortgage interest rates rise? ~
*Sumitomo Mitsui Trust Bank, Ltd.*
Press release: August 8, 2024
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Will a “world with interest rates” come? Not coming? ~What would you do when mortgage interest rates rise? ~
At the Bank of Japan’s monetary policy meeting held on July 30th and 31st, it was finally decided to raise the policy interest rate, and some financial institutions have also announced increases in mortgage interest rates. What do you think about future trends in mortgage interest rates? Based on a questionnaire survey conducted in January 2024, Mirai Institute analyzed the results of “views on future trends in mortgage interest rates” and “what to do if mortgage interest rates rise in the future” in August. It was published as a report. [Point]
* Views on future trends in mortgage interest rates *
● A higher percentage of homeowners than renters have some opinion on trends in mortgage interest rates (will mortgage interest rates rise, remain the same, or fall in the future)
●Among people who live in their own homes, a higher percentage of people who are currently repaying their mortgage have some kind of opinion on trends in mortgage interest rates.
* If mortgage interest rates rise, would you consider making any changes to your mortgage repayments? *
●67.2% of people are considering making some changes to their repayments, and 32.8% are not considering making any changes. ●People who are considering making a change are more likely to want to participate in a financial literacy seminar or to receive advice from a financial institution or financial advisor. ” “Money plan for retirement funds” “Preferential treatment systems for savings and investments such as NISA and iDeCo”
* 1． More than 70% of people currently repaying their mortgage have an opinion on interest rate trends*
The survey asked about future trends in mortgage interest rates using five options: “I think it will go up from the current rate,” “I don’t think it will change,” “I think it will go down from the current rate,” “I don’t know,” and “I’m not interested.” . When we checked the answers to this question by current residence type, we found the results shown in [Chart 1].
* [Chart 1] Thoughts on future trends in mortgage interest rates (by current residence type)*
(Source) If the source is not specifically indicated, created by Mirai Research Institute based on Sumitomo Mitsui Trust and Asset Research Institute’s “Awareness and Actual Situation Survey on Housing and Asset Formation” (2024)
*1: Living together with the parent’s household (family home), etc. *Less than 5.0% are omitted from the graph
This time, we analyzed those who selected either “I think it will go up from the current level,” “I think it will stay the same,” or “I think it will go down from the current level.” However, the percentage of respondents who answered “I have some opinion on trends in mortgage interest rates” was highest for “homeowners” at 53.0%, followed by “rental” at 45.6%, and “other” at 35.3%, decreasing gradually. . Additionally, 29.1% of respondents in the “Other” category said they were “not interested” in mortgage interest rates, which was approximately 1.6 times the rate for “homeowners.” It seems that there are differences in the way people think about and the level of interest they have in future mortgage interest rates, depending on the shape of their current home.
Therefore, for those who own their own homes, we subdivided them into whether or not they were currently using a mortgage loan [Chart 2].
* [Chart 2] Thoughts on future trends in mortgage interest rates (by whether or not a mortgage is used)*
*1: People who own the home they currently live in due to inheritance or transfer, etc. *Respondent: People who currently live in the home *Less than 5.0% are omitted from the graph
Among those who own a home, an overwhelming 71.3% of those who are using a home loan (currently repaying the home loan) say they have some opinion on trends in home loan interest rates. There were many. On the other hand, even among those who own their own home,
approximately one in four people who do not have a mortgage loan or who own their current home through inheritance or transfer are not interested. “No” was selected.
Naturally, for those who are currently repaying their mortgage, future trends in mortgage interest rates can have a direct impact on their own household finances. For this reason, we believe that there are many people who are gathering information about “future trends in mortgage interest rates” and are making plans such as “This is what will happen at home, so this is what we will do at home.” Masu. So, what are you thinking, “What should I do at home?”
*2. 67.2% would consider changing their repayments if mortgage interest rates rose*
When we asked people who currently own their homes and are currently repaying their home loan whether they would consider making any changes to their home loan repayments if the home loan interest rate were to rise, they answered, The results showed that 67.2% of respondents said they would consider it, and 32.8% said they would not consider it [Chart 3].
* [Chart 3] What to do if mortgage interest rates rise*
*Respondents: People who currently own a home and are using (repaying) a mortgage *Number of respondents: 1,218
Furthermore, we confirmed what specific changes they would like to consider in [Chart 4].
* [Chart 4] Things you would like to consider if mortgage interest rates rise in the future (multiple answers possible)*
*Respondents: Among those who currently own a home and are using a mortgage, those who answered that they would consider making some changes to their repayments if mortgage interest rates rose. *Number of respondents: 818
In terms of specific considerations, 45.0% of respondents said they would like to make a partial early repayment, by a far greater margin than any other option. Partial prepayment refers to repaying part of the balance of your home loan earlier than scheduled in addition to the monthly repayments, but many financial institutions do not charge any fees for “partial” prepayment. In addition, in many cases it can be easily done through the internet, so it seems that it is easy to handle.
Also, instead of taking action right away, first “I will check myself to see how much of a difference a rise in interest rates will make in my repayments” (20.1%) and “I will consult with my borrowing financial institution about revising my repayment plan” (19.9%). The selection of is probably an expression of the natural desire to first understand the impact of rising interest rates.
So, from the perspective of utilizing such external knowledge, is there a difference between those who “consider” and “those who do not consider” “desiring to participate in financial literacy seminars” and “desiring advice from financial institutions/financial advisors”? We also confirmed the following [Charts 5 and 6].
* [Chart 5] Experience and intention to participate in financial literacy seminars (*1)*
*1: Defined contribution pension investment education, life
planning/asset formation seminars, etc. *Respondents: Those who currently live in their own homes and are using (repaying) a home loan.
* [Chart 6] Do you receive advice from financial institutions or financial advisors?*
*Respondents: Those who currently live in their own home and are using (repaying) a home loan.
In both cases, we found that those who were considering the option were more likely to want to participate in a financial literacy seminar and to receive advice from a financial institution or financial advisor.
So, what exactly is the advice that “people considering” would like to receive? [Chart 7] confirms this point.
* [Chart 7] Advice you would like to receive from a financial institution or financial advisor (multiple answers possible)* *Respondents: Those who selected “I would like to receive some advice” from Chart 6 “Consider changing housing loan repayments” *Number of respondents: 544
The most common answer was “Money plan as a whole (current and future)” at 62.5%, followed by “Retirement funds in money plan” at 48.2%, and “Preferential savings and investment schemes such as NISA and iDeCo” at 39.0%. The result was %.
Mortgage loans are generally high-cost, long-term loans, so if mortgage interest rates rise in the future, the impact will be large and last for a long time. When considering how to deal with this, “partial early repayment” may be effective temporarily. However, it is essential that you look back on your own life and money plans and consider how you should position your mortgage loan, drawing on outside knowledge.
In addition to the above article, the results of a survey conducted by the Asset Mirai Research Institute, which compiles more data. * From “Survey on awareness and actual situation regarding housing and asset building” (2024) *
* Will a “world with interest rates” come? Not coming? *
* – What will you do when mortgage interest rates rise? -*
The assets of the Mirai Institute website (
https://mirai.smtb.jp/category/report/2447/). Please take a look. -Reference- Sumitomo Mitsui Trust/Future Research Institute of Assets Original questionnaire survey of 10,000 people (5th)
[Survey overview]
(1) Survey name: “Survey on awareness and actual situation regarding housing and asset building” (2024)
(2) Survey target: 18-69 year olds nationwide, excluding those working in related industries (finance, research, mass media, advertising) (3) Survey method: Web questionnaire survey
(4) Survey period: January 2024
(5) Sample size: 10,948
[Inquiries regarding article content and survey results]
Sumitomo Mitsui Trust Bank Sumitomo Mitsui Trust/Future Research Institute of Assets
E-MAIL: mirai@smtb.jp