【summary】
When choosing a home loan in 2026, it is important not to judge the difference between fixed interest rates and variable interest rates solely by ``low current interest rates.''
While variable interest rates make it easier to reduce the initial repayment amount, there is a risk that interest rates will rise in the future.
While fixed interest rates tend to have higher initial interest rates, their advantage is that repayment amounts are easier to read.
| Interest rate type | Suitable for |
|---|---|
| Variable interest rate | People who can afford to repay even when interest rates rise |
| Fixed interest rate | People who want to fix the repayment amount |
| Fixed period selection type | People who want to fix the interest rate for a certain period of time |
| Mixed type | People who want some parts fixed and some parts variable |
The bottom line is not to choose the lowest interest rate.
The goal is to set a repayment amount that will not break your household finances even if interest rates rise.
This article does not recommend either fixed or variable interest rates. The appropriate choice will depend on the conditions of the mortgage, whether there is a 5-year rule or 125% rule, group credit, fees, mortgage deduction, family structure, and income stability.
Difference between fixed interest rate and variable interest rate
Mortgage interest rates are broadly divided into fixed interest rates and variable interest rates.
| Item | Fixed interest rate | Variable interest rate |
|---|---|---|
| Interest rate | Fixed at the time of borrowing | Reviewed regularly |
| Repayment amount | Easy to read | Possibility of change in the future |
| Initial interest rate | tends to be high | tends to be low |
| Interest rate rise risk | Small | Large |
| Household budget management | Easy to manage | Needs review |
According to materials from the Japan Housing Finance Agency and the Ministry of Land, Infrastructure, Transport and Tourism, variable interest rates are categorized as types where the applicable interest rate changes during repayment depending on the financial situation, and fixed rate types are types where the applicable interest rate is fixed until the end of repayment.
Advantages of variable interest rates
The biggest advantage of variable interest rates is that the initial interest rate is likely to be lower.
For the same loan amount, the monthly repayments will be lower than with a fixed rate loan.
| Benefits | Contents |
|---|---|
| Low initial repayment amount | Easy to reduce monthly burden |
| Good compatibility with early repayment | The faster the principal can be reduced, the more effective it is |
| It is advantageous if interest rates do not rise | The longer interest rates remain low, the greater the benefits |
However, variable interest rates are not safe because they are cheap.
If interest rates rise during the repayment period, your future repayments may increase.
Notes on variable interest rates
What's especially scary about variable interest rates is that you might end up taking out a large loan without having enough money in your household budget.
| Points to note | What happens |
|---|---|
| Interest rate rise | Monthly repayment amount and interest burden increase |
| Borrowing too much | Repayment ratio increases |
| Overlapping with education expenses | Repayments become heavier during periods of increased spending |
| Decrease in income | Reduction in bonuses and overtime pay makes it difficult |
If you choose a variable interest rate, calculate not only the current repayment amount, but also the repayment amount if the interest rate were to increase by 1% or 2%.
Some people think that they can just refinance if the interest rate goes up, but the fixed interest rate may also go up at that time.
In addition, refinancing requires administrative fees, guarantee fees, registration fees, judicial scrivener fees, etc. If you are re-entering a new group trust, the coverage conditions may change depending on your age and health condition.
Advantages of fixed interest rate
The advantage of fixed interest rates is that repayments are easy to read.
This makes it easier to plan for future repayments at the time of borrowing.
| Benefits | Contents |
|---|---|
| Stable repayment amount | Easy to plan your household finances |
| Strong against interest rate increases | Hard to worry about future increases |
| Mentally comfortable | No need to worry too much about market prices or policy interest rates |
Fixed interest rates are suitable for families who have difficulty predicting future changes in their household finances, such as children's education expenses, retirement funds, job changes, etc.
Notes on fixed interest rates
Fixed rate loans often have higher initial interest rates than variable rate loans.
Therefore, if interest rates remain low, the total repayment amount may end up being higher than the variable rate.
| Points to note | Contents |
|---|---|
| The initial repayment amount is high | The amount you can borrow may decrease |
| Disadvantageous when interest rates continue to be low | Interest payments may be higher than fluctuations |
| Refinancing fee | There will be a cost if you refinance in the future |
A fixed interest rate is chosen to ``reduce uncertainty'' rather than ``to gain a profit.''
Which side is suitable?
The decision is made based on the durability of the household budget, not on interest rate expectations.
| Household finances/personality | Type that suits you |
|---|---|
| Low repayment ratio | Easy to consider variable interest rates |
| Both of us work, so we have extra savings | Variable interest rates are also easy to choose |
| Education costs will increase | Consider fixed interest rates |
| Large fluctuations in income | Fixed interest rate |
| I can't sleep because I'm worried about rising interest rates | Fixed interest rates |
| There is room for early repayment | Consider variable interest rates |
Mortgage is not a game where you guess the right answer.
It is important to choose a method that will not damage your household finances even if you remove it.
Estimation when interest rates rise
If you choose a variable rate, look at at least the following scenarios:
| Scenario | Things to check |
|---|---|
| Current interest rate | Current monthly payment amount |
| +1% | Is the household budget sustainable |
| +2% | Is it okay even if it overlaps with educational expenses |
| +3% | Is it at a level where you are considering selling or refinancing |
If you end up in the red even if the repayment amount goes up a little, it's better to reconsider the loan amount itself.
Before worrying about the interest rate type, the first thing to do is to avoid borrowing too much.
Rules for reviewing repayment amounts for variable interest rates vary depending on the product. Even if there is a 5-year rule or 125% rule, if the interest burden increases, the reduction of principal may be delayed. At online banks, some products have rules that differ from the general explanation, so please check the contract and repayment schedule.
summary
When choosing a home loan in 2026, it cannot be said that fixed interest rates or variable interest rates are always better.
While variable interest rates make it easier to reduce the initial burden, there is a risk that interest rates will rise.
While fixed interest rates make it easier to stabilize repayments, they tend to be more burdensome initially.
Ultimately, make your decision based on whether your household finances can withstand a rise in interest rates, rather than on interest rate expectations.
Reference
- Housing Finance Agency "Interest Rate Information"
- Ministry of Land, Infrastructure, Transport and Tourism "Housing"