For those paying off home loans, there is a possibility of an increased burden, while for those with savings, expectations for higher interest rates are emerging. Even with the same ‘rate hike,’ the impact on households, companies, and stocks is not one-directional. On September 18, 2026, the Bank of Japan decided to raise the uncollateralized overnight call rate, which serves as a benchmark for policy rates, from around 1.0% to around 1.25%. The new policy will be applied starting September 24. What is the policy interest rate? The policy interest rate is a short-term interest rate that the central bank guides to adjust the economy and prices. This time, the Bank of Japan explains that the underlying inflation rate is approaching 2%, against a backdrop of rising crude oil prices, a weak yen, and the passing on of wage increases to prices. However, just because the policy rate has risen by 0.25 percentage points does not mean that home loan or deposit interest rates will immediately rise by 0.25 percentage points. The timing and extent of the reflection vary depending on the financial institution and product. What will change for households? Suppose you have a home loan balance of 30 million yen, 30 years remaining, and equal principal and interest repayments, and the interest rate rises from 1.0% to 1.25% per year. In a simple calculation where the interest rate remains unchanged for the entire period, the monthly repayment amount will increase from approximately 96,500 yen to approximately 100,000 yen, an increase of about 3,500 yen. That is a difference of about 42,000 yen per year. Actual variable-rate home loans have rules for adjusting the interest rate review timing and repayment amounts. The first step is to check your next review date in your contract or bank app. On the other hand, there is a possibility that interest rates on ordinary deposits and time deposits will also be raised. However, since conditions vary by bank, it is necessary to compare deposit interest rates as well. Is it always a tailwind for bank stocks? From here on is the general market view. Since banks earn profits from the difference between lending rates and deposit rates, rising interest rates can lead to an improvement in ‘interest margins.’ However, bank stocks do not necessarily rise. If deposit interest rates rise significantly due to competition for deposits, profits will be squeezed. Declining prices of bonds held, worsening repayment by borrowers, and a decrease in corporate demand for funds are also headwinds. Let’s check the following four points in financial results. 1. The difference between lending rates and deposit rates 2. Whether the loan balance is increasing 3. Whether valuation losses on bonds are expanding 4. Whether expenses for loan losses are increasing It also affects other stocks Real estate companies and REITs with high borrowings, and companies that use loans for capital investment, may face heavier funding costs. Also, growth stocks, which are valued based on expectations of future profits, may see their stock valuations decline during periods of rising interest rates. However, some companies will rise if their performance is strong. It is important not to lump everything together as ‘bank stocks because of rate hikes’ or ‘sell growth stocks because of rate hikes.’ A step you can take today If you have a home loan, check your interest rate type and next review date. If you own stocks, check the interest-bearing debt and interest payments of the companies you hold in their latest financial results. Even just doing this allows you to connect the news to your own household finances and investments. Even after a rate hike, stock prices, exchange rates, and interest rates can move in the opposite direction of expectations. Do not trade based solely on price movements immediately after an announcement; make small amounts and diversification your basic approach. I share knowledge that connects daily life and the stock market in language that even beginners can understand. If you want to learn from the mechanisms together, please follow me. If you add me as a friend, you will receive special benefits and useful information????Click#JapaneseStocks #InvestmentBeginner #BankofJapan #InterestRates #HomeLoan* Bank of Japan: Regarding Changes to the Guideline for Market Operations (September 18, 2026)??* Bank of Japan: Schedule and Results of 2026 Monetary Policy Meetings??* Bank of Japan: Monetary Policy Management as of July 31 (1.0% before change)??* Bank of Japan: Interest Rate Statistics Related to Deposits and Loans??
