Major banks and internet banks in Japan have raised fixed-rate mortgage rates since June. The average 10-year fixed rate of the three mega-banks has risen by 0.08% to 3.89%, the highest level in about 13 years. Expectations are growing that the Bank of Japan will raise interest rates further at its monetary policy decisions scheduled for June 13 and 14. There are concerns that rising interest rates will accelerate the decline of businesses and increase bankruptcies. To protect yourself from these rising interest rate risks, individuals need to change their perception of interest rates.

In mid-May, global inflation concerns intensified, putting upward pressure on interest rates. On May 22, the yield on newly issued 10-year Japanese government bonds exceeded 1.00%. This is the highest level since May 2013, when the Bank of Japan introduced unconventional quantitative easing and entered an ultra-low interest rate environment under Abenomics. With growing concern about rising interest rates, more and more companies in Japan and the United States are issuing corporate bonds to secure funds early. Japan is undergoing a significant societal shift from a "world without interest rates" to a "world with interest rates."

Since the collapse of the stock market bubble in the early 1990s, the Bank of Japan has been steadily tightening its monetary easing policy. Most of the Lost 30 Years has been essentially a zero-interest rate environment. Many still believe that "interest rate risk is negligible." But that situation is finally about to change. The yield on 2-year government bonds, which is highly sensitive to expectations of monetary policy developments, has also risen. Japan is also seeing a revival of a world with interest rates, and changes will be felt in everyday life and corporate operations, such as rising mortgage rates or higher deposit rates.

Since many people are not accustomed to rising interest rates, it is important to prepare in advance for how it could affect daily life or business operations.