The trend toward higher yields for Japan's long-term government bond is starting to be felt by consumers.
Some are concerned about the impact on housing loans.
Home buyers can choose between fixed and floating interest rates when they borrow money. Financial institutions decide fixed rates based on the level of long-term interest rates.
The possibility of higher borrowing costs was on the mind of prospective home buyers at a showroom in Tokyo's Shibuya district.
One of them said " Of course, it's better if loan rates don't rise. But, if they do, we have to cope with it by cutting spending on other things."
Major banks and other lenders started gradually raising fixed-mortgage rates in the latter half of 2023. A home builder says that 90 percent of its customers taking out loans choose the variable option that is based on short-term interest rates.
Akatsuka Haruhiro, an official of home builder Open House, says "Customers have been paying more attention to mortgage rates since the Bank of Japan ended its negative-rate policy in March. We're providing financial advice to ease the concerns of home buyers."
The benchmark 10-year government bond yield temporarily rose to one percent or higher for three consecutive days this week. That was attributed to investors' view that Japan's central bank might normalize its monetary easing policy earlier than many had expected.
An expert at Mizuho Securities points out that a rise in interest rates could also have some benefits.
Tanji Noriatsu says " If rate hikes lead to a rise in assumed investment yields for life insurance, for instance, that would boost consumer confidence and be a positive for the economy."
Tanji says that the long-term rate could remain at the current level or a bit higher for the time being. But he adds that it may again dip below one percent if investors determine the BOJ will have difficulty hiking rates further.