TOKYO - Banks are engaged in an intense battle to attract deposits, pushing interest rates higher. While savings account holders may benefit from increased interest earnings, rising rates also mean heavier mortgage burdens and potential rent hikes.
Caster Kumazaki: Major banks such as Mitsubishi UFJ, Mizuho, and Sumitomo Mitsui will raise their ordinary deposit rates to 0.2% starting in March.
At SBI Shinsei Bank, linking an account with SBI Securities will increase the rate to 0.4%.
AU Jibun Bank offers a maximum of 0.51% for customers who subscribe to designated AU mobile plans and link their accounts with AU PAY.
PayPay Bank offers up to 2.0%, subject to conditions that include holding both yen and US dollar deposits.
Just a year ago, major banks were offering a mere 0.001% on ordinary deposits. To put this in perspective, depositing 1 million yen at 0.001% would earn just 10 yen in interest before tax over a year. At 0.5%, that figure jumps to 5,000 yen.
Economic analyst Keiichi Katani notes, "Interest rates are likely to continue rising. This is an era where individuals need to choose their bank carefully. However, it may be wise to wait a little longer before making a decision."
'Interest Rate Wars Are Here': Analysts Predict Further Increases
Economic Analyst Keiichi Katani: For years, interest rates were close to zero, making bank choice largely irrelevant. But as rates rise, banks are now fiercely competing to attract customers by offering higher deposit interest.
From a consumer perspective, this marks a shift toward greater choice in banking. The Bank of Japan is likely to continue raising rates, meaning further increases are expected. This will push banks to compete even more aggressively, possibly offering rates of 1.5% or even 2.0% on fixed-term deposits.
Given these trends, it may be prudent to wait before committing to a fixed-term deposit.
Caster Horan Chiaki: How long should people wait before making a decision?
Economic Analyst Keiichi Katani: Interest rates will almost certainly keep rising throughout the year. It would be best to observe how banks adjust their rates before locking in a deposit.
Caster Inoue Takahiro: PayPay Bank is offering a bold 2.0%—do you think there’s room for even higher rates?
Economic Analyst Keiichi Katani: PayPay Bank’s offer includes foreign currency deposits, which carry some risk of principal loss. However, as rates rise, more banks may start offering 1.5% or 2.0% on standard fixed-term deposits.
Caster Horan Chiaki: Younger generations have never experienced an era of high interest rates, so banking interest has rarely been a factor in financial planning.
Analyst Tanaka Ulvé-Kyo: Are megabanks still a better option than online banks?
Economic Analyst Keiichi Katani: Previously, there was little difference among banks, but regional and online banks are now aggressively raising rates to compete with megabanks. It’s no longer just about familiarity—comparing interest rates across banks is now crucial.
Caster Inoue: Will major banks struggle if they don’t act fast?
Economic Analyst Keiichi Katani: Frankly, megabanks are feeling the heat. In the past, they could attract deposits effortlessly, but as competition intensifies, they must take proactive steps to retain customers.
'Floating Rates Are Attractive for Now': Mortgage Costs Could Rise Sharply
Caster Kumazaki: Let’s turn to mortgage rates.
According to mortgage comparison site Mogecheck, the average floating mortgage rate stands at 0.45%, while the average fixed rate is 1.86%.
How much could mortgage rates rise?
Economic Analyst Keiichi Katani: With the Bank of Japan’s recent rate hike, we can expect mortgage rates to rise by 0.25% from April.
The BOJ plans to gradually raise rates, meaning we could see sequential increases of 0.25% at a time. However, markets can be unpredictable, and sudden jumps are always possible.
Source: TBS
