Fixed Rate vs Floating Rate Mortgage: Quick Answer for Singapore Buyers
If you prioritise stability and predictable monthly payments, a fixed rate mortgage usually suits you better; if you can tolerate short-term payment fluctuations to potentially save interest over time, a floating rate loan may be more suitable.
To improve your mortgage approval chances in Singapore, focus on: keeping your Total Debt Servicing Ratio (TDSR) within MAS limits, reducing existing debt, maintaining stable income, and applying through a trusted multi-bank platform like Homejourney that helps you match the right bank, rate type, and loan structure to your risk profile.
This article is a focused cluster in Homejourney’s broader home loan pillar guide, zooming in on the question: “Fixed Rate vs Floating Rate Mortgage – Which to Choose, and How to Get Approved?” For a full step-by-step journey from affordability to keys collection, refer to our main mortgage pillar guide on Homejourney .
Understanding Fixed vs Floating Rate Home Loans in Singapore
In Singapore, most bank home loans for HDB and private properties fall into two main interest rate types: fixed rate mortgage and floating rate loan.
What is a Fixed Rate Mortgage?
A fixed rate mortgage is a home loan where the interest rate is locked in for a specified lock-in period, typically 2–5 years for banks like DBS, OCBC, UOB, HSBC, Standard Chartered and Maybank.[3] After the fixed period, it usually converts to a floating rate package.
Example: A young couple buying a 4-room resale HDB in Toa Payoh at around S$800,000 may take a 2-year fixed package at around 1.5–1.7% per annum in early 2026, compared with 3%+ levels seen in 2022–2023.[1][2] Their monthly instalment stays the same during the lock-in, making budgeting easier.
Key characteristics:
- Rate stays constant during lock-in (e.g. 1.60% for first 2 or 3 years).
- Good for periods when interest rates are expected to rise or are already very low but you want certainty.
- Prepayment or sale during lock-in may trigger penalties (check each bank’s terms).
What is a Floating Rate Loan?
A floating rate loan (also called variable rate) is pegged to a reference rate plus a bank spread. Today, most Singapore banks use SORA (Singapore Overnight Rate Average) as the reference benchmark.[3] The total interest rate = SORA + bank margin.
Common types:
- 3M SORA packages – Rate resets every three months based on 3-month compounded SORA.
- 1M SORA packages – Rate resets monthly; more responsive, but more volatile.
In late 2025, 3M SORA fell from around 3% to about 1.2%, bringing many floating packages down to the low- to mid-1% range before bank spreads.[2] This explains why HDB flat owners are increasingly refinancing from the 2.6% HDB concessionary rate to cheaper bank loans.[2][5]
Interactive Interest Rate Trends Chart
The chart below shows recent interest rate trends in Singapore, helping you visualise how SORA-linked floating rates have moved relative to low fixed rate packages:
Use this trend together with Homejourney’s live bank rates page Bank Rates to time your choice between fixed vs floating rate.
Fixed vs Floating Rate: Pros, Cons & Risk Profiles
To quickly compare fixed vs floating rate, use the table below as a starting point before drilling into your own risk profile.
Who Should Choose Fixed Rate?
Based on real cases we see at Homejourney and current MAS rules, a fixed rate mortgage often suits:
- First-time HDB buyers in estates like Punggol, Sengkang, Yishun, where upgraders may already have car loans and education loans; stable instalments help keep TDSR safe.
- Families with tight monthly cash flow (e.g. combined income S$7,000–S$9,000 buying a 4-room in Tampines or Woodlands) who cannot afford sudden S$300–S$500 jumps in instalment.
- Owner-occupiers planning to stay at least 5–7 years in the same home, such as a 3-bedder condo in Hougang or Clementi.
In the recent period where fixed packages dropped to about 1.4–1.8%, some homeowners locked in 2- or 3-year fixed packages to secure predictable payments while rates are at multi-year lows.[1][2] This is especially useful if you’re expecting a baby, reducing work hours, or planning big expenses.
Who Should Choose Floating Rate?
A floating rate loan tends to suit borrowers who:
- Have strong income buffers and emergency savings (e.g. dual-income professionals in CBD roles, living in city-fringe condos such as Queenstown or Redhill).
- May sell or refinance within a few years, for example investors buying a 1- or 2-bedder near MRT hubs like Paya Lebar or Jurong East.
- Actively monitor rates and are comfortable with some volatility, using tools like Homejourney’s real-time SORA tracker Bank Rates .
With 3M SORA near 1.2% at end-2025 and banks’ spreads around 0.3–0.8%, many floating packages currently start in the low 1% range.[1][2] However, you must be prepared for future cycles where SORA can rise again, increasing instalments.
Deep Dive: How SORA-Based Floating Loans Work
SORA (Singapore Overnight Rate Average) is published by MAS and reflects the volume-weighted average rate of unsecured overnight interbank SGD transactions.[3] It is now the main benchmark replacing SIBOR for new mortgages.
3M vs 6M SORA – What’s the Difference?
Most home loan packages in Singapore use 3M SORA, while 6M SORA is more common for corporate loans. Some banks also offer 1M SORA for borrowers who want faster rate adjustments.[3]
- 3M SORA: Rate refreshed every 3 months. Smoother changes, moderate volatility. Popular for home owners.
- 1M SORA: Adjusts monthly. More responsive to rate cuts but also to rate hikes.
Example: If 3M SORA is 1.2% and your bank (e.g. DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB) offers a spread of 0.6%, your effective rate = 1.8% p.a. This may still be below the HDB loan rate of 2.6%, which is pegged at 0.1% above the CPF OA rate.[2][5]
