Fixed vs Floating Rate Mortgages: Bank Rate Comparison Guide
Choose a fixed rate mortgage if you prioritize payment stability and peace of mind; opt for a floating rate loan if you're comfortable with potential fluctuations to potentially save on interest when rates fall. This Homejourney cluster guide dives deep into fixed vs floating rate options for Singapore homebuyers, helping you make informed decisions in the 2026 market. As rates hit 3-year lows around 1.3%-1.5%, understanding interest rate types is crucial for HDB upgraders, first-time buyers, and investors.[1][2]
At Homejourney, we prioritize your safety and trust by verifying rates daily and offering transparent comparisons from DBS, OCBC, UOB, HSBC, and more. This tactical guide connects to our pillar on Singapore mortgage types, providing actionable steps for mortgage rate comparison. Let's break it down.
What is a Fixed Rate Mortgage?
A fixed rate mortgage locks your interest rate for a set period, typically 2-5 years, ensuring predictable monthly payments.[1][4] This suits budget-conscious buyers who want certainty amid economic uncertainty. After the lock-in, it often converts to a floating rate.
In Singapore, fixed packages from banks like DBS and OCBC are now competitive at 1.65%-1.75% p.a., down from 2023 peaks, moving in tandem with SORA-linked floating rates.[2][3] Insider tip: Fixed rates protect against US Federal Reserve hikes, which influence Singapore trends—ideal if you're buying a $800,000 HDB in Tampines.
Understanding Floating Rate Loans
A floating rate loan adjusts with market benchmarks like SORA (Singapore Overnight Rate Average), the volume-weighted average of overnight interbank SGD transactions.[8] Most are pegged to 3M or 6M compounded SORA plus a bank spread (e.g., 0.5%-0.8%).[1]
With SORA at 1.2% as of late 2025—its lowest since 2022—floating rates offer 1.3%-1.5% p.a., potentially lower than fixed if rates keep falling.[2][3] However, rises could increase payments; save a buffer equivalent to 1% rate hike on your loan.
The chart below shows recent interest rate trends in Singapore, highlighting SORA movements and bank packages:
As seen, SORA dipped from 3% to 1.2%, benefiting floating borrowers but underscoring volatility.[2] Track live 3M/6M SORA on Homejourney's bank rates page.
Fixed vs Floating Rate: Pros, Cons & Comparison Table
Fixed offers stability but higher initial rates and lock-in penalties (e.g., 1.5% of loan amount). Floating provides flexibility and lower averages long-term in stable environments but risks hikes.[1][6]
| Feature | Fixed Rate Mortgage | Floating Rate Loan |
|---|---|---|
| Rate Stability | Locked 2-5 years | Fluctuates with SORA |
| Current Rates (2026) | 1.65%-1.75% p.a.[3] | 1.3%-1.5% (SORA + spread)[2] |
| Best For | Risk-averse, first-timers | Rate optimizers |
| Risk | Miss savings if rates fall | Payments may rise |
2026 Bank Snapshot (via Homejourney): DBS 2Y Fixed ~1.70%; OCBC 3M SORA +0.60% ~1.80%; UOB Floating ~1.40%; HSBC Fixed 1.65%. Rates vary by profile—compare side-by-side at Homejourney bank rates.[1][3]
SORA Deep Dive: 3M vs 6M & Impact on Payments
SORA replaced SIBOR for transparency.[8] 3M SORA compounds quarterly (more responsive); 6M less volatile. For a $500,000 loan (30Y), 0.5% SORA drop saves ~$130/month.[2]
Predictions: SORA may hold low at 1.2%-1.5% in 2026 if Fed cuts continue, favoring floating.[1] Use Homejourney's mortgage calculator to simulate: Input property price, see payments for DBS fixed vs UOB SORA.
Decision Framework: Which to Choose?
- Assess Risk Tolerance: Conservative? Fixed. Optimistic on cuts? Floating.
- Check Economic Outlook: Low rates likely? Floating wins long-term.[1][2]
- Review Features: Penalty waivers, partial prepay—key for flexibility.[3]
- Run Numbers: At Homejourney, calculate eligibility instantly.
- Apply Smart: Submit one app via Singpass to DBS, OCBC, UOB etc., get best offers.
For HDB buyers in Yishun ($600k resale), fixed suits if income volatile. Investors eyeing condos? Floating for savings. Disclaimer: This is educational; consult advisors. Rates as of Feb 2026—verify on Homejourney.[2]
Refinancing? Shorter lock-ins let you switch if rates drop further.[1] Link to our pillar: Fixed vs Floating Rate Mortgages: Which to Choose in 2026 | Homejourney ">Fixed vs Floating in 2026 for full coverage.
FAQ: Fixed vs Floating Rate Mortgages
Q: Is fixed or floating cheaper in 2026?
A: Floating often lower now (1.3%-1.5%) but fixed offers certainty at 1.65%+.[2][3]
Q: What is SORA and how does it affect my loan?
A: SORA benchmarks floating rates; track on Homejourney. 1% rise adds ~$200/month on $500k loan.[8]
Q: Can I switch from fixed to floating?
A: Yes, post-lock-in, but check fees. Homejourney simplifies repricing.
Q: Best banks for fixed rates?
A: HSBC, DBS at ~1.65%; compare all at bank-rates.
Q: How to apply safely?
A: Use Homejourney's Singpass integration—one form, multi-bank offers, verified securely.
Ready for your Fixed Rate vs Floating Rate Mortgage Which to Choose: Bank Rate Comparison Guide? Visit Homejourney bank-rates to compare, calculate, and apply today. Find properties in budget via property search. Trust Homejourney for safe, transparent decisions.
