Fixed Deposit Pegged Home Loan Explained: Frequently Asked Questions
A Fixed Deposit Pegged Home Loan, also known as FHR loan or fixed deposit rate loan, ties your mortgage interest to a bank's fixed deposit (FD) rates plus a fixed spread. This creates a stable rate loan option popular among Singapore homebuyers seeking predictability over volatile benchmarks like SORA.
At Homejourney, we prioritize your safety and trust by verifying rates from DBS, OCBC, UOB, and more. This cluster article answers key questions on FD pegged mortgages, linking back to our pillar guide on Types of Home Loans in Singapore: Complete Comparison Guide for full coverage.
What is a Fixed Deposit Pegged Home Loan?
A Fixed Deposit Pegged Home Loan bases your interest rate on the bank's average fixed deposit rate over a specific period, such as 6 months (FHR6) or 18 months (FHR18), plus a bank spread[1][2]. For example, DBS's FHR6 might be 1.90% FD rate + 1.25% spread = 3.15% total rate[2].
Introduced by DBS in 2014 as an alternative to SIBOR, these loans gained popularity, with nearly 90% of DBS home loans being FHR by 2017[2]. Unlike true fixed rates, FHR is floating but tends to stay lower longer since banks balance FD payouts with loan pricing[1].
Homejourney makes it safe to compare: View live rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and others at Homejourney bank rates.
How Does an FHR Loan Work in Singapore?
The rate formula is: FD Rate (e.g., 6-month average) + Spread (bank's fixed margin, e.g., 1.60%)[1][2]. Higher numbers like FHR18 yield slightly higher base rates than FHR6 due to longer-term FD premiums[1].
For a $1 million loan over 25 years at 1.6% (pre-TOP promotional), monthly payments are about $4,161, rising to $4,618 at 2.1% post-TOP with 1% spread increase[3]. Banks like DBS simplify to FHR6 today, closing older tranches after 18 months[2].
Under MAS rules, all loans must peg to indices like SORA or FHR; zero-spread promos ended[2]. Use CPF Ordinary Account (2.5% interest) for repayments via CPF portal, but note opportunity cost[5]. Homejourney's calculator at Homejourney mortgage calculator shows your eligibility instantly with Singpass.
FHR vs SORA: Key Differences for Singapore Buyers
FHR (fixed deposit rate loan) tracks bank FD rates, often steadier in low-rate environments, while SORA (Singapore Overnight Rate Average) follows daily interbank lending, more volatile short-term[5].
| Feature | FHR (FD Pegged) | SORA |
|---|---|---|
| Peg | Bank FD average (e.g., 6M) | Overnight rate avg (3M/6M) |
| Stability | Higher (banks avoid hiking FD and loans simultaneously) | Market-driven, quicker changes |
| Current Appeal | Popular for under-construction properties | Standard post-2024 shift from SIBOR |
The chart below shows recent interest rate trends in Singapore:
As seen, FHR often lags SORA rises, suiting risk-averse buyers under TDSR (60% debt cap) and MSR (30% for HDB)[7]. Compare via Homejourney for multi-bank offers.
Advantages and Disadvantages of FD Pegged Mortgages
- Lower Rates Long-Term: Banks hesitate to raise FD rates, keeping loans competitive (e.g., 0.6% historical vs SIBOR)[1].
- Transparency: Tied to public FD rates, less arbitrary than board rates[1].
- Promo Periods: 2-year fixed at 1.30% for new buys, then FHR6 +1.60%[1].
Drawbacks include potential spread hikes post-TOP and classification as board-like (bank-controlled)[1]. Not ideal if rates fall sharply, as FHR adjusts slower.
For HDB upgraders, check MSR compliance; private property buyers face ABSD. Homejourney verifies your fit with one-click multi-bank apps via Singpass.
Is FHR Right for You? Actionable Steps
- Check Eligibility: Use Homejourney's tool at mortgage calculator for TDSR/MSR.
- Compare Rates: See DBS FHR6, UOB equivalents at bank rates.
- Apply Safely: Submit once on Homejourney for DBS, OCBC, HSBC offers; Singpass auto-fills CPF/income.
- Refinance Tip: If existing SORA > FHR, switch via our step-by-step guide (min 2% savings advised).
- Consult: WhatsApp Homejourney experts for personalized advice.
Real example: $800k Punggol HDB resale buyer saves $150/month on FHR6 vs SORA in 2025 rates. Always verify with MAS/HDB sites; Homejourney ensures transparency.
Frequently Asked Questions on FHR Loans
Q1: Can I use FHR for HDB flats?
A: Yes, banks offer FHR for HDB loans alongside HDB's 2.6% fixed (CPF OA +0.1%). Compare on Homejourney; bank loans suit higher-value flats[7].
Q2: What's the current FHR6 rate from DBS?
A: Around 1.90% + spread (e.g., 1.25%), totaling ~3.15%; check live at Homejourney as rates fluctuate[2].
Q3: FHR vs SORA: Which is better now?
A: FHR for stability if rates rise; SORA if expecting falls. Use our comparison tool for your scenario[5].
Q4: How to refinance to FHR?
A: Calculate savings on Homejourney, apply multi-bank, get offers in days. No fees if under lock-in.
Q5: Is FHR safer than board rates?
A: Yes, FD peg adds transparency, though still bank-influenced[1]. Homejourney prioritizes verified partners.
Disclaimer: Rates as of 2025; not financial advice. Consult professionals. Homejourney verifies data for your safety.
Ready to secure your FD pegged mortgage? Start with Homejourney bank rates for trusted comparisons and applications. Explore properties at property search within budget. For full details, read our pillar: FHR Loan Explained.
