What Is a Fixed Deposit Pegged Home Loan?
A fixed deposit pegged home loan (also called FDR or FHR loan) is a mortgage where your interest rate is tied to your bank's fixed deposit rates rather than market benchmarks like SORA.[1][2] When you take out an FHR loan, the total interest rate you pay consists of two components: the bank's fixed deposit rate plus a fixed spread (or margin) that remains constant throughout your loan tenure.[2]
For example, if DBS offers an FHR6 rate of 1.90% and adds a 1.25% spread, your total interest rate would be 3.15%.[2] The "6" in FHR6 indicates the loan is pegged to the bank's 6-month average fixed deposit rate. Other options include FHR8 (8-month) or FHR18 (18-month), with longer tenures typically offering slightly higher rates.[1][4]
This differs fundamentally from SORA-pegged loans, where rates track the Singapore Overnight Rate Average—a market-based benchmark that fluctuates based on interbank lending conditions.[6] Understanding this distinction is crucial when comparing home loan options on Homejourney's bank rates comparison page, where you can see real-time rates from all major Singapore banks.
How Fixed Deposit Pegged Loans Work: The Mechanism
The logic behind FHR loans creates a natural check on interest rate increases. If a bank wants to raise your mortgage rate, it must also increase the interest it pays to fixed deposit account holders—directly increasing the bank's costs.[1] This structural constraint theoretically keeps FHR rates more stable than other floating rate options.
Your total monthly repayment under an FHR loan depends on three factors:[2]
- The prevailing fixed deposit rate (which can change)
- The bank's spread or margin (which remains fixed)
- Your loan principal and remaining tenure
When the bank adjusts its fixed deposit rates, your mortgage rate adjusts automatically. However, the spread component—typically ranging from 0.80% to 1.60% depending on the bank and property type—never changes.[2][4] This means your rate movements are partially predictable: you know exactly how much the spread contributes to your total cost.
For properties under development, many banks offer lower spreads (sometimes as low as 0.60%), which increase to standard rates once the property receives its Temporary Occupancy Permit (TOP).[4] This is an important detail first-time buyers should clarify when comparing offers.
FHR vs SORA: Key Differences for Singapore Borrowers
The shift from SIBOR-pegged loans to FHR loans began in 2014 when DBS introduced this alternative, and by 2017, approximately 90% of DBS's new home loan customers had chosen FHR products.[2] Understanding why requires comparing FHR to SORA, the current market standard.
SORA (Singapore Overnight Rate Average) is a market-based rate that reflects actual interbank lending costs. The 3-month compounded SORA rose from 0.1949% in early 2022 to 3.641% by February 2024, demonstrating significant volatility.[6] When SORA increases, all SORA-pegged mortgages increase immediately, often with little notice.
FHR rates are bank-controlled and typically move more gradually because banks adjust fixed deposit rates more cautiously than market rates change. Banks consider customer deposits a stable funding source and avoid frequent rate changes that might drive depositors to competitors.[2]
However, this doesn't mean FHR loans are "fixed"—they're still floating rates that can increase. The advantage is potentially lower volatility, not immunity from rate rises. When comparing options, use Homejourney's mortgage eligibility calculator to see how different rate scenarios would affect your monthly payments.
Current FHR Rates from Major Singapore Banks
As of February 2026, FHR loans are offered primarily by DBS and UOB, though availability and terms vary by property type and borrower profile.[3] Here's what you should know about current offerings:
DBS Bank remains the largest FHR provider with multiple variants (FHR6, FHR8, FHR18). DBS typically offers competitive spreads and frequently provides rate caps during initial fixed periods—for example, capping rates at 1.80% for the first two years regardless of how much fixed deposit rates rise.[3]
UOB also offers FHR products with similar structures. Both banks compete aggressively on spreads and promotional rates for new purchases and refinancing.
Rather than listing specific rates (which change frequently), the most reliable way to compare current offers is through Homejourney's bank rates page, which displays real-time rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, and other major lenders. You can instantly see which banks offer the lowest spreads and best lock-in period terms for your specific situation.
Advantages of Fixed Deposit Pegged Home Loans
Lower initial rates: FHR loans typically offer lower interest rates than SORA-pegged mortgages, particularly during periods when SORA is elevated. This translates directly to lower monthly payments and less interest paid over the loan tenure.[1]
Rate stability: Because banks control fixed deposit rates rather than market forces, FHR rates tend to move more gradually and predictably. You're less exposed to sudden market shocks that spike SORA.[2]
Transparent pricing: The structure is straightforward—fixed deposit rate plus fixed spread equals your total rate. There's no confusion about what drives your payments.[2]
Rate caps available: Many banks offer interest rate caps for the first 2-3 years, providing certainty about maximum monthly payments during the initial period.[3]
Refinancing flexibility: If you're currently on a SORA loan and rates have risen, refinancing to FHR can reduce your rate if the bank's fixed deposit rate is lower than current SORA levels. Homejourney's refinancing tools make it easy to calculate potential savings.
Disadvantages and Risks
Still a floating rate: Despite marketing emphasizing stability, FHR loans are not fixed-rate mortgages. Your rate can and will increase if the bank raises fixed deposit rates.[2][3] Don't confuse "stable" with "fixed."
Bank control over rates: While the structural constraint (banks must pay depositors more to raise mortgage rates) provides some protection, banks ultimately control both sides of the equation. They can adjust spreads during refinancing or for new products.[2]
Limited product availability: Only DBS and UOB actively offer FHR loans. If you want to compare across more banks, you're limited to SORA-pegged or other rate types. This is why comparing all available options on Homejourney is essential—you see every bank's complete product range.
Spread increases at TOP: For properties under development, spreads typically increase from promotional rates (0.60%) to standard rates (1.25%-1.60%) once the property completes.[4] This can increase monthly payments by $100-200 or more, depending on loan size.
Less favorable during rising rate cycles: If fixed deposit rates are rising, you might actually be better off with SORA-pegged loans if SORA is rising more slowly. The advantage works both ways.
FHR vs Other Rate Types: Quick Comparison
Understanding how FHR compares to alternatives helps you make an informed choice:
- FHR vs SORA: FHR typically offers lower rates and potentially slower rate increases, but limited to two banks. SORA offers more bank options but higher volatility.
- FHR vs Fixed Rate: FHR provides lower initial rates than true fixed-rate mortgages (which are rare in Singapore), but with rate risk. Fixed rates eliminate rate uncertainty at the cost of higher initial rates.
- FHR vs Board Rate: FHR is technically a type of board rate (bank-controlled), but more transparent than traditional board rates because it's tied to published fixed deposit rates.
For a comprehensive side-by-side comparison of all rate types and which banks offer each, visit Homejourney's bank rates comparison tool.
Who Should Choose an FHR Loan?
FHR loans make sense if you:
- Prefer rate stability over maximum flexibility
- Believe fixed deposit rates will remain relatively low
- Want to lock in lower rates during a high SORA environment
- Plan to refinance if rates rise significantly
- Are comfortable with a floating rate but want the most predictable option available
- Are buying a property under development and can benefit from promotional spreads
FHR loans may not suit you if you:
- Need absolute certainty about monthly payments (true fixed-rate mortgages are better, though rare)
- Believe rates will fall significantly and want to benefit from SORA declines
- Prefer maximum bank choice and competition (only two banks offer FHR)
- Are risk-averse and uncomfortable with any rate uncertainty
Practical Steps: Evaluating FHR Offers
When comparing FHR loan offers, focus on these specific details:
- Total rate in year 1-2: Ask the bank for the exact rate (fixed deposit rate + spread) that applies during any promotional period or rate cap. Calculate your monthly payment using this rate.
- Rate after promotional period: Understand what happens when the cap expires or promotional period ends. Will the spread increase? By how much?
- Spread for your property type: Confirm whether you qualify for development-stage spreads (lower) or post-TOP spreads (higher). This can add $100+ to monthly payments.
- Refinancing terms: Ask about refinancing conditions if you want to switch to another bank's FHR product or SORA loan later.
- Compare across banks: Use Homejourney's bank rates page to instantly see DBS and UOB's current spreads, caps, and promotional terms side-by-side.
Rather than manually calling multiple banks, you can submit one application through Homejourney to receive offers from all major banks simultaneously. This lets banks compete for your business, often resulting in better rates and terms than you'd negotiate individually.
Real-World Example: FHR Loan Impact
Consider a $400,000 loan over 25 years. During the development stage with an FHR6 rate of 0.6% and 0.6% spread (total 1.2%), monthly payments would be approximately $1,436.[1] Once the property receives TOP and the spread increases to 1.6% (total rate 2.2%), monthly payments rise to approximately $1,618—a $182 monthly increase.[1]
This example illustrates why understanding the full loan structure—including spread changes at TOP—is critical. Many first-time buyers are surprised by payment increases after property completion.
Frequently Asked Questions About FHR Loans
Q: Can FHR rates decrease?
A: Yes. If the bank lowers its fixed deposit rates, your FHR loan rate decreases automatically. This happened during periods when banks reduced rates to attract deposits, providing genuine savings to FHR borrowers.[2]
Q: Is FHR better than SORA right now?
A: It depends on current market conditions and your outlook. During periods when SORA is high, FHR often offers better rates. Use Homejourney's mortgage calculator to compare both options with current rates and see which saves you more over your loan tenure.
Q: Can I refinance from SORA to FHR?
A: Yes, many borrowers refinance from SORA to FHR when fixed deposit rates are lower than SORA. However, you'll incur refinancing costs (legal fees, valuation, etc.), so calculate whether the rate savings justify these costs. Homejourney's refinancing tools help with this analysis.
Q: What happens if I refinance an FHR loan to another bank?
A: You can refinance to another bank's FHR product or to SORA. The new bank will charge refinancing fees, but you may secure a lower spread or better promotional terms. Compare offers from all banks before deciding.
Q: Are FHR loans available for HDB properties?
A: FHR loans are primarily available for private properties. HDB buyers typically use HDB's own concessionary loan (pegged at 0.1% above CPF Ordinary Account interest rate) or bank loans pegged to SORA or other rates. Check with your bank about specific HDB loan products.
Making Your Decision: Next Steps
Choosing between FHR, SORA, and other rate types is one of the most important financial decisions you'll make. To ensure you're getting the best possible terms:
