Fixed vs Floating Rate Mortgage: Which to Choose in Singapore | Homejourney
Executive Summary: This definitive guide compares fixed rate mortgage and floating rate loan options for Singapore homebuyers and investors, covering SORA trends, 2025 rates from DBS, OCBC, UOB and more, pros/cons, and a decision framework. Homejourney prioritizes your safety with verified rates, Singpass applications, and multi-bank comparisons at https://www.homejourney.sg/bank-rates.[1][2][3]
Whether you're a first-time HDB buyer in Tampines or refinancing a condo in Orchard, understanding interest rate type and mortgage rate comparison ensures confident decisions in Singapore's market. Track live 3M/6M SORA on Homejourney for real-time insights.
Table of Contents
- What is a Fixed Rate Mortgage?
- What is a Floating Rate Loan?
- SORA Deep Dive: Singapore's Key Benchmark
- Fixed vs Floating: Pros, Cons & Table
- Current Singapore Mortgage Rates 2025
- Historical Trends & 2025 Forecasts
- Decision Framework: Which to Choose?
- Homejourney Tools for Smart Choices
- FAQ: Fixed vs Floating Mortgages
What is a Fixed Rate Mortgage?
A fixed rate mortgage locks your interest rate for a set period, typically 1-3 years, providing predictable monthly payments. After the lock-in, it converts to a floating rate.[1][3]
In Singapore, fixed rates are ideal for budgeting, especially for HDB upgraders from a 4-room flat in Punggol (average $500,000 resale) to a 5-room ($700,000). Your repayment stays constant despite market shifts, per MAS guidelines.
Key Features:
- Lock-in period: 1, 2, or 3 years
- Higher initial rate than floating (by ~0.3-0.5%)[1]
- Penalty for early repayment: 1.5% of loan amount[3]
Example: On a $800,000 loan at 1.5% fixed for 2 years, monthly payment is ~$3,500, unchanged even if SORA rises.[3]
What is a Floating Rate Loan?
A floating rate loan adjusts with market benchmarks like SORA, offering lower initial rates but variable payments.[1][2]
Suitable for investors buying ECs in Sengkang, where rates may fall, saving thousands. Board rates (bank-set) or SORA-linked are common; SIBOR phased out by 2024.[1]
Types in Singapore:
- SORA (3M/6M): ~90% of loans[1]
- Board Rate: Quarterly reviews[2]
- Fixed Deposit Peg: Stable bank FD rates[2]
Rates change monthly/quarterly, but no lock-in penalties post-initial period.[3]
SORA Deep Dive: Singapore's Key Benchmark
SORA (Singapore Overnight Rate Average) is the volume-weighted average of overnight interbank rates, replacing SIBOR/SOR for stability.[1]
ABS publishes daily; 3M SORA averages past 3 months. As of Dec 2025, 3M SORA ~2.8%, down from 3.2% peaks.[1][4] Homejourney tracks live rates at https://www.homejourney.sg/bank-rates.
3M vs 6M SORA Comparison
[1][3] 3M SORA suits aggressive refinancers; 6M for conservative buyers.
Impact Example: $1M loan at 3M SORA +0.6% = $3,800/month at 3.4% effective.[3]
Fixed vs Floating: Pros, Cons & Mortgage Rate Comparison
Fixed offers certainty; floating potential savings in falling rates.[1][4]
Who Should Choose What?[1]
- Fixed: Risk-averse families, e.g., young couples buying $1.2M condo in Yishun.
- Floating: Investors, HDB owners expecting cuts (save ~$200/month if SORA drops 0.5%).
Current Singapore Mortgage Rates 2025
As of Dec 2025, rates at 3-year lows due to US Fed cuts.[4] Compare on Homejourney's tool including DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank.[3]
Best Fixed Rates (Resale Condo)
Best Floating Rates (Refinance)
Rates from Homejourney partners; verify at https://www.homejourney.sg/bank-rates.[3] HDB loans fixed at 2.6% EIR (stable but higher).[1]
Historical Trends & 2025 Forecasts
SORA peaked at 3.5% in 2023, now ~2.8%.[1][4] Fixed rates followed, dropping 0.5% YOY.
2025 Outlook: MAS easing + US cuts predict further declines; floating saves more.[1][4] Insider Tip: Refinance HDB resale >$600k to floating for chunky savings.[3]
Graph Insight: Floating outperformed fixed by 0.4% avg over 5 years in low-rate cycles.[1]
Decision Framework: Which Interest Rate Type to Choose?
Assess risk tolerance, timeline, market view.[1][4]
- Risk Profile: Conservative? Fixed. Aggressive? Floating.
- Loan Size: >$1M? Favor floating for savings potential.
- Tenure: Short (<10yrs)? Fixed locks low rates.
- Economy: Expect cuts? Floating (2025 likely).[4]
Actionable Steps:
- Calculate affordability at https://www.homejourney.sg/bank-rates#calculator.
- Track SORA on Homejourney.
- Apply multi-bank via Singpass for best offers.
Disclaimer: Not financial advice; consult advisors. Rates change; Homejourney verifies daily.[1]
Homejourney Tools for Safe, Trusted Mortgage Choices
Homejourney builds trust with transparent tools prioritizing your security.
- Compare Rates: DBS to Citibank side-by-side at https://www.homejourney.sg/bank-rates.
- Mortgage Calculator: Instant payments/eligibility.
- Singpass Apply: One form, multiple bank offers – income verified instantly.
- Refinance Guide: Step-by-step, no fees hidden.
- Search budget-fit properties at https://www.homejourney.sg/search.
Read more in .[1]
Next Steps: Use our calculator, compare fixed vs floating rate, apply securely. Homejourney ensures verified data for confident journeys.
FAQ: Fixed vs Floating Rate Mortgages in Singapore
Q: What is the difference between fixed and floating rate home loans?
A: Fixed locks rates for 1-3 years for stability; floating (SORA-linked) varies for potential savings.[1][2]
Q: Are floating rates cheaper in 2025?
A: Yes, ~0.3% lower initially; ideal with rate cuts forecast.[1][3][4]
Q: Which banks offer best fixed rates?
A: Promos at 1.48% (2yr); check Homejourney for DBS/OCBC/UOB.[3]
Q: How does SORA affect my payments?
A: 0.25% SORA drop saves ~$200/month on $1M loan.[1]
Q: Can I switch from fixed to floating?
A: Yes, post-lock-in; minimal fees via Homejourney refinance tool.
Q: Best for HDB buyers?
A: Bank floating if >$600k; HDB fixed at 2.6% for simplicity.[3]
Q: How to compare mortgage rates?
A: Use Homejourney's free tool at https://www.homejourney.sg/bank-rates for all banks.
