Flexible
interest rates or also known as adjustable rate mortgage (ARM) is not fixed, but changes with the base lending rate which usually tracks the economy of the country. When I was applying for a mortgage loan to buy an apartment in Tokyo in 2007, I was planning on a 15 year loan period with a choice between a flexible interest rate or a fixed interest rate. At that time, the key interest rates set by the Bank of Japan was already low at 0.5%, one of the lowest in the world for a developed country. Most borro
wers with longer loan periods or who want to play it "safe" would want fixed interest rates for the entire loan duration so the loan repayments are predictable and protected in the contract. Though of course, the bank would charge considerably higher for fixed interest rate loans. If I would choose a flexible interest rate, the rate at that time was 1.875%, while a fixed interest rate for 15 years would be 3.5%. Needless to say, I chose the flexible interest rate. Today, I am paying a rate of just 1.475% due to a rate cut by the Bank of Japan since December 2008 to 0.1%. Yet, the majority of home owners chooses to play safe, whether Japanese or foreigners and would in my opinion not gain throughout their loan period.
interest rates or also known as adjustable rate mortgage (ARM) is not fixed, but changes with the base lending rate which usually tracks the economy of the country. When I was applying for a mortgage loan to buy an apartment in Tokyo in 2007, I was planning on a 15 year loan period with a choice between a flexible interest rate or a fixed interest rate. At that time, the key interest rates set by the Bank of Japan was already low at 0.5%, one of the lowest in the world for a developed country. Most borro
wers with longer loan periods or who want to play it "safe" would want fixed interest rates for the entire loan duration so the loan repayments are predictable and protected in the contract. Though of course, the bank would charge considerably higher for fixed interest rate loans. If I would choose a flexible interest rate, the rate at that time was 1.875%, while a fixed interest rate for 15 years would be 3.5%. Needless to say, I chose the flexible interest rate. Today, I am paying a rate of just 1.475% due to a rate cut by the Bank of Japan since December 2008 to 0.1%. Yet, the majority of home owners chooses to play safe, whether Japanese or foreigners and would in my opinion not gain throughout their loan period.
The 
cost of loan is so cheap in Japan. In fact, my Japanese bank offered me a low fixed rate of 1% for the first year and thereafter, the rate moves with the current interest rate. Just for a brief period between August to October, I paid the highest interest rate of 1.875% before the Bank of Japan started to cut its interest rate by 20 basis points twice in the year. When deciding for the flexible interest rates, I know Japan's GDP growth would never rise to 3.5% again to be able to support such interest rates. Furthermore, as the loan period is short and the amount not too huge, I planned for a contingency to pay off the loan earlier if the interest rate skyrockets. If that ever happens, it would mean land prices in Tokyo would shoot up exponentially which is to my favor to sell it at the high price. Else, I would just be content to collect consistent stable high rent income for as long as possible since my small apartment is at a central location. When the economy enters a recession, more Japanese would move to Tokyo to look for jobs and there would never be a problem to find someone to rent, just a little difficult to maintain high rent prices.
cost of loan is so cheap in Japan. In fact, my Japanese bank offered me a low fixed rate of 1% for the first year and thereafter, the rate moves with the current interest rate. Just for a brief period between August to October, I paid the highest interest rate of 1.875% before the Bank of Japan started to cut its interest rate by 20 basis points twice in the year. When deciding for the flexible interest rates, I know Japan's GDP growth would never rise to 3.5% again to be able to support such interest rates. Furthermore, as the loan period is short and the amount not too huge, I planned for a contingency to pay off the loan earlier if the interest rate skyrockets. If that ever happens, it would mean land prices in Tokyo would shoot up exponentially which is to my favor to sell it at the high price. Else, I would just be content to collect consistent stable high rent income for as long as possible since my small apartment is at a central location. When the economy enters a recession, more Japanese would move to Tokyo to look for jobs and there would never be a problem to find someone to rent, just a little difficult to maintain high rent prices. 
Anyo
ne with different views? Developing countries do have a potential to spring surprises, though I doubt the common person on the street could outsmart the banker who factored in the higher cost in the fixed interest rate mortgage. Still want to play safe? Please share your views.
ne with different views? Developing countries do have a potential to spring surprises, though I doubt the common person on the street could outsmart the banker who factored in the higher cost in the fixed interest rate mortgage. Still want to play safe? Please share your views.(Photos show Yebisu Garden Place with a large piazza to relax after shopping. Also houses the Yebisu beer museum with free admission and a treat of a tasting set of 4 mini sized beers costing just 500 yen at the end of your visit).
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