Fixed Deposit Pegged Home Loans Explained: FHR Guide by Homejourney
Fixed Deposit Pegged Home Loans (FHR loans) offer Singapore homebuyers a potentially stable alternative to floating rate mortgages like SORA-linked loans. Pegged to banks' fixed deposit rates plus a spread, these fixed deposit rate loans provide predictability amid rate fluctuations, but they're not truly fixed. Homejourney, prioritizing your safety and trust, breaks down everything from mechanics to current 2026 rates, helping you decide confidently.
This definitive pillar guide covers FHR loan definitions, comparisons with SORA, real Singapore examples, and actionable steps. Whether you're a first-time HDB buyer or refinancing a condo, use Homejourney's bank rates page to compare DBS, OCBC, UOB offers securely.
Table of Contents
- What is a Fixed Deposit Pegged Home Loan (FHR)?
- How FHR Loans Work in Singapore
- FHR vs SORA: Key Differences
- Current FHR Rates from Major Banks (2026)
- Advantages and Disadvantages of FHR Loans
- Eligibility, TDSR, and MSR Rules
- Real-World Examples and Calculations
- HDB Loans vs Bank FHR Loans
- Refinancing into FHR Loans
- Homejourney Tips for Safe FHR Applications
- FAQ: Fixed Deposit Pegged Home Loans
What is a Fixed Deposit Pegged Home Loan (FHR)?
A FHR loan, or Fixed Deposit Home Rate loan, is a floating mortgage pegged to a bank's fixed deposit (FD) interest rate for a specific tenure, plus a fixed bank spread.[1][2] Unlike truly fixed-rate loans, FHR rates adjust when the bank changes its FD rates, but they aim for stability as FD rates tend to move slower than interbank rates.
In Singapore, DBS and UOB popularized FHR loans post-2017, replacing older SIBOR pegs.[1][2] The 'FHR' followed by a number (e.g., FHR6, FHR9) indicates the FD tenure it's based on—shorter tenures like FHR6 often have lower base rates.[1] Total rate = FD rate + spread (e.g., DBS FHR6 at 0.25% + 1.25% spread = 1.50%).[1]
These FD pegged mortgages surged in popularity, with nearly 90% of DBS home loans being FHR by 2017, due to promotional low spreads.[1] Banks like DBS simplified to single tranches like FHR6 in recent years.[1]
Homejourney verifies rates daily across partners like DBS, OCBC, UOB, HSBC, and Standard Chartered. Check live FHR loan offers on our bank rates page.
How FHR Loans Work in Singapore
Banks publish FD rates for tenures like 6, 9, or 18 months. FHR pegs your loan to one, averaging rates over that period.[1][3] If DBS raises its 6-month FD rate from 0.25% to 0.30%, your loan rate rises accordingly after review (typically monthly or quarterly).[2]
The spread (0.75%-1.50%) is fixed for the loan tenure, covering bank profits.[1] Banks must notify you 30 days before rate changes, per MAS rules.[6] Some FHR packages cap rates (e.g., 1.8% for 2 years) for added protection.[2]
Lock-in periods (2-3 years) apply, with penalties for early repayment. Post-lock-in, refinancing is flexible—Homejourney simplifies this with multi-bank comparisons.
FHR Rate Components Table
| Component | Description | Example (DBS FHR6) |
|---|---|---|
| FD Peg | Bank's published FD rate | 0.25% (6-month avg) |
| Spread | Fixed bank margin | 1.25% |
| Total Rate | FD + Spread | 1.50% |
FHR suits buyers seeking stable rate loans over volatile SORA. Original insight: In rising rate environments like 2022-2024 (SORA from 0.19% to 3.64%), FHR6 lagged SORA peaks by 0.5-1%, per historical data.[4]
FHR vs SORA: Which is Better for You?
FHR vs SORA is a top debate for Singapore borrowers. SORA (Singapore Overnight Rate Average) is a transaction-based interbank rate, published daily by ABS, now the standard post-SIBOR.[4][5] FHR ties to bank-controlled FD rates, potentially smoother but less transparent.[1][2]
SORA fluctuates faster with market liquidity; FHR changes with bank deposit competition, often lagging.[1] In 2026, with SORA at ~3%, FHR6 offers similar totals but steadier path.
The chart below shows recent interest rate trends in Singapore:
As seen, FHR tracks deposit rates closely, less volatile than daily SORA swings. For HDB upgraders in areas like Punggol, FHR provides payment stability during CPF-heavy repayments.
FHR vs SORA Comparison Table
| Feature | FHR Loan | SORA Loan |
|---|---|---|
| Peg | Bank FD rate | 3M/6M SORA avg |
| Volatility | Lower (lags market) | Higher (market-driven) |
| Control | Bank sets FD | Independent (ABS) |
| Current Total (est. 2026) | 1.4-2.0% + spread | 3.0% + 0.7% spread |
Read more on SORA Home Loans Singapore: Complete Guide by Homejourney. FHR wins for risk-averse buyers; SORA for transparency seekers.
Current FHR Rates from Major Banks (2026)
As of January 2026, DBS FHR6 base is ~0.30% + 1.20% spread = 1.50% total.[1] UOB offers similar FHR8 at 0.35% + 1.15%.[2] OCBC, HSBC provide FD-pegged variants, though less branded as FHR.
Homejourney aggregates real-time rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Public Bank, Hong Leong, Citibank. Visit https://www.homejourney.sg/bank-rates for verified comparisons—updated daily for your trust.
Insider tip: Best FHR deals often for new purchases under $2M; spreads rise post-TOP for under-construction properties.[3]
Advantages and Disadvantages of FHR Loans
Pros:
- More stable than SORA—FD rates rise slower.[1][4]
- Promotional caps (e.g., 1.8% for 2 years).[2]
- Competitive in low-rate environments; historical savings vs SIBOR.[3]
- CPF Ordinary Account (2.5% pa) usable for repayments.[4]
Cons:
- Not fixed—rates can rise if FD increases.[2]
- Bank controls peg, less transparent than SORA.[2][5]
- Higher spreads now (no zero-spread promos).[1]
- Lock-in penalties during early years.
Balanced view: FHR suits conservative buyers like families in Toa Payoh HDBs planning 25-year tenures.
Eligibility, TDSR, and MSR Rules
All bank loans, including FHR, fall under MAS Total Debt Servicing Ratio (TDSR ≤60%) and HDB Mortgage Servicing Ratio (MSR ≤30% for HDB flats).[6] Factor 200bps stress test for floating rates like FHR.
Example: $10K monthly income? Max property ~$1.7M under TDSR. Use Homejourney's mortgage calculator for instant eligibility.
CPF rules: Use OA for principal/interest, but lose 2.5% OA interest. ABSD applies (5-30% for second properties). Homejourney verifies via Singpass for accurate pre-approvals.
Real-World Examples and Calculations
Example 1: HDB Buyer in Sengkang
$500K 4-room HDB, 25-year FHR6 loan at 1.50%. Monthly: ~$2,100 (vs HDB 2.6% at $2,300). Savings: $200/month. Over 25 years: ~$60K saved.
Calculation: Loan amount = $400K (80% LTV). Formula: M = P[r(1+r)^n]/[(1+r)^n-1], r=0.00125 monthly.
Example 2: Condo Refinancer in Orchard
$1.5M condo, refinance from 3% SORA to 1.50% FHR. Monthly drop: $3,500 to $2,900. Break costs: 1.5% penalty (~$22K), recouped in 18 months.
Original insight: For Punggol BTO waitlist buyers (3-year wait), lock FHR now via Homejourney for rate protection. Search matching flats on Homejourney property search.
HDB Loans vs Bank FHR Loans
HDB loans (2.6% pegged 0.1% above CPF OA) are fixed indefinitely, no lock-in, but only for HDB.[6] FHR for private/HDB bank loans: lower initial rates but floating risk.
Choose HDB for max stability; FHR for privates like ECs in Tengah. Compare via Homejourney bank rates.
Refinancing into FHR Loans
Refinance if spread <0.5% better or rates drop. Process: Check eligibility, compute costs (penalty 1-1.5%, valuation fees ~$500). Homejourney's multi-bank submission via Singpass speeds approvals from DBS-UOB.
2026 tip: With SORA stabilizing, FHR refinance ideal if your spread >1.3%. Link to aircon maintenance post-move: Homejourney aircon services.
Homejourney Tips for Safe FHR Applications
1. Compare on bank-rates: DBS/OCBC/UOB FHR side-by-side.
2. Use Singpass: Auto-fill income/CPF.
3. Calculate affordability: Eligibility tool.
4. Multi-bank apply: One form, multiple offers.
5. Track SORA/FHR live on Homejourney.
Disclaimer: Not financial advice; consult professionals. Homejourney verifies data for your safety.
Explore projects: Homejourney projects directory. Related: SORA Linked Home Loans Explained.
FAQ: Fixed Deposit Pegged Home Loans
What is an FHR loan?
Fixed Deposit Home Rate loan pegged to bank's FD rate + spread. Offered by DBS/UOB.[1][2]
Is FHR better than SORA?
FHR for stability, SORA for transparency. Depends on risk tolerance.[1][4]
Current DBS FHR6 rate?
~0.30% + 1.20% = 1.50% (check Homejourney for latest).
Can I use CPF for FHR?
Yes, OA funds at 2.5% opportunity cost.[4]
FHR for HDB flats?
Yes, if bank loan; compare vs HDB 2.6%.[6]
How to switch to FHR?
Refinance via Homejourney: Compare, apply multi-bank.
Lock-in period for FHR?
2-3 years; penalties 1-1.5%.[3]
FHR caps explained?
Temporary max rate (e.g., 1.8%) for 1-2 years.[2]
Best bank for FHR 2026?
Compare DBS/UOB on Homejourney.
TDSR impact on FHR?
≤60%; stress-tested +200bps.[6]
Ready for your FHR loan? Start safely on Homejourney bank-rates page. Our verified process ensures transparency, connecting you to trusted partners for confident decisions.
