What is the Japan short-term prime rate and why does it matter?

It is the base lending rate that many banks use to price variable loans to strong corporate clients, and it anchors many floating-rate mortgages. From February 2, 2026, many banks will set it at 2.625%. When this base rises, interest costs on loans tied to it usually increase.

When will ordinary deposit rates rise to about 0.3% in Japan?

Regional banks have announced moves from February 2026, with several raising ordinary deposit rates toward 0.3%. Timelines can vary by bank. Check your bank’s notice and product list to confirm the start date, eligible balances, and any caps or promotional terms that may apply.

How will the change affect mortgage variable rate Japan borrowers?

Variable mortgages often use the short-term prime as a base, minus a discount. With the base at 2.625%, the payable rate can climb at the next reset. Review your discount, reset month, and prepayment rules. Even a 0.10% rise can add a few thousand yen monthly on typical loan sizes.

What can SMEs do to manage higher borrowing costs?

Move surplus cash into higher-yield accounts, negotiate blended pricing on key facilities, and align loan tenors with cash conversion cycles. Consider partial hedging for core borrowing. Ask lenders about rate caps, step-down structures, or early renewal options to smooth the pass-through from the new prime base.

Global Market Insights

Japan Banks December 30: Deposit, Short‑Term Prime Rates Rise on BoJ Hike

ByHuzaifa Zahoor December 30, 2025December 30, 2025

Japan short-term prime rate is moving higher as regional banks respond to the Bank of Japan rate hike. From February 2, 2026, many banks will lift the short‑term prime to 2.625% and raise ordinary deposit rates toward 0.3%. This push changes the math for savers, mortgage borrowers, and SMEs. We explain what shifts now, how costs may pass through, and what to watch in 2026 so investors can plan with clear, local context.