Japanese Banks Raise April Mortgage Rates, While Deposit Rates Remain Relatively Stable

Overview

This report tracks changes in Japanese banks' mortgage and deposit rates in April. The main conclusion is that many banks have raised floating mortgage rates to reflect the December hike, and fixed mortgage rates have also been raised as long-term rates moved higher; by contrast, deposit rates changed little after adjustments earlier in the year, indicating that deposit beta may have stabilized in the context of the 0.75% policy rate.

Core views

The core views are: first, higher mortgage rates will gradually show up starting with April repricing and July repayments, supporting future earnings; second, the increase in fixed-rate mortgages is being driven by higher long-term rates, the removal of promotional spreads, or the end of promotions; third, the lack of further increases in deposit rates reduces pressure on banks' liability costs to keep rising rapidly; fourth, some banks that did not raise rates may see loan volume changes due to their relative pricing advantage.

Analysis framework

The report makes cross-bank comparisons of monthly mortgage rates, fixed-rate adjustments, deposit rate activity, and the policy-rate backdrop, focusing on how loan repricing and deposit beta changes affect Japanese banks' profitability.

Methodology notes

• Interest-rate transmission analysisLoan repricing and deposit beta framework

  Compare the magnitude of mortgage rate increases, changes in deposit rates, and the policy-rate level to determine the direction of banks' net interest margins.

  When loan rates rise with the policy rate or long-term rates while deposit rates remain relatively stable, banks' net interest income typically improves more easily.

• Cross-company comparisonBank rate table comparison

  Track monthly changes in mortgage and deposit rates across different banks.

  The report refers to the April mortgage rate table and deposit rate table, using color coding for mom increases or decreases to identify which banks are more aggressive in repricing.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Japanese bank stocks

  Higher loan rates and stable deposit beta should help improve net interest margins and earnings expectations.

  Strengths

  Rising mortgage rates, relatively stable deposit rates, and improved policy-rate pass-through.

  Weaknesses

  Different repricing strategies among banks may cause loan volume to be affected by higher rates.

  Comparison

  Chiba Bank and au Jibun Bank posted larger increases in fixed rates; MUFG, SBI Shinsei Bank, Shizuoka Bank, AEON Bank, and Sony Bank left mortgage rates unchanged mom.

  Risks

  If deposit competition intensifies again or loan demand is constrained by higher rates, earnings improvement could fall short of expectations.

• Japan interest-rate environment

  The December hike and the rise in long-term rates are the main backdrop for mortgage rate adjustments.

  Strengths

  Rising rates increase banks' asset yields on loan books.

  Weaknesses

  A rapid rise in rates may suppress mortgage demand and increase customer burdens.

  Comparison

  Loan-side adjustments are more pronounced, while there were fewer further increases on the deposit side in March.

  Risks

  Future changes in the policy rate or long-term rates could alter banks' repricing pace.

Key data

• Monthly change in discounted borrowing rates10-35 bp momFrom April 1, several of the banks tracked by Goldman Sachs saw discounted borrowing rates rise mom.
• Mortgage rate level at many banksAbove 1%The report says rates at many banks have already exceeded 1%.
• Change in long-term ratesApprox. 29 bpFrom March 2 to March 31, long-term rates rose by about 29 bp, driving up fixed mortgage rates.
• Policy rate0.75%At this policy-rate level, the report believes deposit beta has stabilized.
• Timing of earnings reflectionStarting with July repayments, contributing to 2Q3/27April repricing will be reflected in July repayments and begin contributing to bank earnings.

Impact & implications

For Japanese banks, the combination of higher lending rates and stable deposit costs is constructive for net interest margins and net interest income. If banks that did not raise mortgage rates attract more loan volume, there may be a trade-off between volume and price; banks with larger rate increases are likely to benefit more quickly from improved loan yields, but customer demand and competitive pressure should be monitored.

Risks

• Deposit rate competition heats up again, causing deposit beta to rise once more.
• Mortgage rate increases may suppress new loan demand or encourage early repayments.
• Banks that do not raise rates may capture share through price advantages, potentially intensifying industry competition.
• Volatility in long-term rates may make fixed-rate mortgage pricing and customer demand unstable.

What to watch

• Watch whether MUFG, SBI Shinsei Bank, Shizuoka Bank, AEON Bank, and Sony Bank see loan volume growth after leaving rates unchanged.
• Track the actual contribution of April repricing to 2Q3/27 earnings once July repayments begin.
• Monitor whether deposit rate activity picks up again and whether deposit beta continues to stabilize.
• Observe changes in customer demand after the larger fixed-rate increases at Chiba Bank and au Jibun Bank.