Fixed Rate vs Floating Rate Mortgage: Quick Answer
If you prioritise certainty and stable monthly instalments, a fixed rate mortgage is usually better. If you can tolerate some fluctuation to potentially save interest when rates are low or falling, a floating rate loan (often SORA-pegged) can be more cost-effective.
For most Singapore buyers in 2026, a practical rule of thumb is: choose fixed rate if you are stretching your budget or buying your first home, and choose floating rate if you have financial buffers, plan to refinance actively, or believe interest rates will stay low.
This cluster guide builds on Homejourney’s main mortgage pillar content on choosing the right home loan type , and zooms in specifically on Fixed Rate vs Floating Rate Mortgage Which to Choose: Bank Rate Comparison Guide so you can decide confidently, with Singapore-specific examples and current bank rate trends.
Understanding Fixed vs Floating Rate Home Loans in Singapore
A fixed rate mortgage in Singapore is a home loan where the interest rate stays the same for a defined lock-in period (typically 2–5 years), regardless of market movements.[3] During this fixed period, your monthly instalment does not change, which makes budgeting easier.
In contrast, a floating rate loan (also called a variable rate) moves up and down based on a reference rate such as 3M SORA (3‑month compounded Singapore Overnight Rate Average) plus a bank spread.[3][1] For example, a package may be quoted as “3M SORA + 0.60%”. When 3M SORA changes, your payable rate and monthly instalment change.
Historically, fixed rate packages in Singapore tend to start slightly higher than floating packages because banks are taking on the risk of rate increases. But in a declining-rate environment like late 2025–2026, the gap has narrowed: CNA reported that fixed home loan rates around early 2025 (about 3.1%) have fallen to around 1.4–1.8% by late 2025, moving in tandem with floating SORA-pegged loans.[1]
SORA Explained: The Benchmark Behind Most Floating Loans
SORA (Singapore Overnight Rate Average) is the MAS-recommended benchmark that reflects the average rate of unsecured overnight interbank SGD transactions.[3] Rather than a single daily quote, banks typically use the compounded 3‑month or 6‑month SORA published by MAS, which smooths out day-to-day volatility.
In 2025, 3M SORA dropped from around 3% to roughly 1.2% by mid-December, its lowest level since 2022, leading to cheaper SORA-pegged mortgages.[1] By early 2026, many banks price their most competitive floating packages off 3M SORA plus a spread, with all-in rates often in the 1.3–1.7% range, depending on the bank and promotional period.[2][4]
The chart below shows recent interest rate trends in Singapore to help you visualise how benchmarks like SORA have moved in the last six months:
When SORA falls, your floating rate package can become cheaper over time; when it rises, your instalments increase. This is why understanding how SORA behaves is critical before committing to a floating rate loan.
Fixed vs Floating Rate: Pros, Cons & Risk Profiles
Here is a simple comparison tailored for Singapore borrowers deciding between fixed and floating rate packages in 2026.
Real-Life Singapore Example: 4-Room HDB in Punggol
Imagine you are buying a resale 4‑room HDB flat in Punggol, near Oasis LRT, at about $650,000 (a realistic price for newer blocks close to Waterway Point in 2025–2026 based on recent HDB resale statistics).[4] After down payment and CPF usage, you take a $520,000 bank loan over 25 years.
Approximate monthly instalments (rounded, for illustration only):
- Fixed rate 1.65% p.a. for 2 years: Monthly ≈ $2,116
- Floating rate 1.40% p.a. initially: Monthly ≈ $2,035
In the first year, the floating package saves you about $80–$90/month compared to the fixed package. But if SORA rises and your effective rate climbs to 2.2% p.a. after a year, your instalment can jump to about $2,252, which is higher than the fixed-rate instalment. This illustrates the trade-off between short-term savings and long-term certainty.
Current 2026 Bank Rate Landscape: What Borrowers Are Seeing
Based on 2026 market comparisons, many major banks in Singapore (DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank and others) are offering:
- Promotional fixed rates around 1.45–1.75% p.a. for 2–3 year lock-in packages, depending on property type and loan size.[2]
- SORA-pegged floating packages often in the range of 1.30–1.70% p.a. in year 1 (3M SORA plus a spread).[2][4]
External mortgage data providers highlight that some banks, such as Maybank and Standard Chartered, have been aggressive with low spreads and shorter 1‑year lock-ins for floating packages, appealing to borrowers who want flexibility to refinance quickly if rates change.[2]
HDB owners have also been refinancing from HDB’s stable 2.6% loan to cheaper bank loans as floating SORA rates fell to around 1.3–1.4% in 2025, with banks dangling cash rebates and free conversions after the first year.[4] This trend continues into 2026 as long as SORA stays below the HDB rate.
Because these numbers move frequently, Homejourney strongly recommends checking live rates before you commit. On the Homejourney bank rates page Bank Rates , you can:
- Track live 3M and 6M SORA benchmarks, updated daily.
- Compare promo packages from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Hong Leong Bank, Citibank and more in one place.
- Use the integrated mortgage calculator Mortgage Rates to see your monthly instalments instantly.
How Bank Spreads and Margins Work (and Why They Matter)
Most floating packages are structured as benchmark + spread. The benchmark is usually 3M SORA; the spread is the bank’s margin. For example:
- Year 1–2: 3M SORA + 0.60%
- Year 3 onwards: 3M SORA + 0.80%
Even if SORA stays constant, your rate can rise when the spread steps up
