Fixed Rate vs Floating Rate Mortgage Which to Choose: Frequently Asked Questions
For Singapore homebuyers, choosing between a fixed rate mortgage and a floating rate loan depends on your risk tolerance, budget stability needs, and SORA trends. Fixed rates offer payment certainty for 2-5 years, ideal for first-time HDB buyers, while floating rates tied to SORA can save money if rates fall further in 2026.
This FAQ cluster dives into key questions on fixed vs floating rate options, building on our pillar guide Fixed vs Floating Rate Mortgages: Singapore Guide | Homejourney Fixed vs Floating Rate Mortgages: Singapore Guide | Homejourney . At Homejourney, we prioritize your safety with verified bank rates from DBS, OCBC, UOB, and more—compare them instantly at https://www.homejourney.sg/bank-rates.
What Is a Fixed Rate Mortgage in Singapore?
A fixed rate mortgage locks your interest rate for a set period, typically 2-5 years, regardless of market changes. After the lock-in, it converts to a floating rate. Banks like OCBC and DBS offer these for stability, with current 3-year fixed rates around 2.5-3% as SORA hits 3-year lows at 1.2%.[2][1]
For example, on a S$500,000 HDB loan in Toa Payoh, a 3-year fixed rate at 2.8% means predictable monthly payments of about S$2,100. This suits families budgeting for school fees near Bishan MRT (5-min walk from many resale flats).[2]
What Is a Floating Rate Loan and How Does SORA Work?
A floating rate loan, or interest rate type pegged to benchmarks like 3M or 6M SORA plus a bank spread (e.g., 0.5-0.8%), adjusts with market rates. SORA, the Singapore Overnight Rate Average set by MAS, replaced SIBOR in 2021 and reflects actual interbank transactions for transparency.[3][1]
3M SORA changes monthly; 6M SORA quarterly. With SORA at 1.2% (Dec 2025 low), floating packages from UOB or HSBC start at 1.7-2.2%, cheaper than fixed but riskier if rates rise.[2] Track live 3M/6M SORA on Homejourney's bank rates page.
The chart below shows recent interest rate trends in Singapore, highlighting SORA movements over the past 6 months:
As seen, SORA fell from 3% in January 2025 to 1.2%, making floating rates attractive now—but fixed protects against US Fed-linked hikes.[1][2]
Fixed vs Floating Rate: Pros, Cons, and Mortgage Rate Comparison
Use this table for a clear mortgage rate comparison:
| Fixed Rate Mortgage | Floating Rate Loan | |
|---|---|---|
| Rate Stability | Fixed for 2-5 years, then floating | Adjusts with SORA + spread |
| Current Rates (2026) | 2.5-3.5% (e.g., OCBC 5-yr) | 1.7-2.8% (e.g., DBS 3M SORA +0.6%) |
| Pros | Budget certainty; protects from rises | Lower initial rates; savings if SORA falls |
| Cons | Higher start; miss rate drops | Payment volatility; higher if rates rise |
| Best For | Risk-averse HDB upgraders | Investors in Punggol condos expecting cuts |
Fixed remains popular—4 in 5 OCBC customers chose it in 2025 for repayment peace.[2] Floating suits if you can handle fluctuations, like condo investors near Jurong East MRT.[1]
Who Should Choose Fixed vs Floating Rate in 2026?
Choose fixed if risk-averse: First-time buyers for Ang Mo Kio HDB (e.g., S$600k resale) value steady S$2,500 payments amid family expenses. Opt for floating if tolerant of change and expecting SORA drops to 2.6% by end-2025—savings on S$1M Tengah EC could hit S$4,100 yearly.[1][2]
Assess via Homejourney's free calculator at https://www.homejourney.sg/bank-rates#calculator. DBS/OCBC fixed packages save vs older floating; refinance via Homejourney for multi-bank offers using Singpass.[2]
Decision Framework: 5 Steps to Choose Your Interest Rate Type
- Check Risk Tolerance: Fixed for stability; floating for potential savings.
- Review Trends: Use Homejourney's SORA tracker—lows favor floating.[1]
- Compare Banks: Side-by-side DBS, UOB, HSBC at https://www.homejourney.sg/bank-rates.
- Calculate Payments: Test S$800k loan scenarios on our tool.
- Apply Safely: One Homejourney submission gets offers from all partners—no fees, verified data.
Insider tip: For Tengah BTO waitlists, lock fixed now before potential hikes; refinance penalty-free post-lock-in.[5] Always consult pros—Homejourney connects you securely.
Fixed Rate vs Floating Rate Mortgage Which to Choose: Frequently Asked Questions
Q1: Are fixed rates always higher than floating in Singapore?
A: Yes, typically 0.5-1% higher initially, but offer certainty. In 2026 lows, gaps narrow—check Homejourney for live mortgage rate comparison.[1][2]
Q2: How does 3M vs 6M SORA differ for floating loans?
A: 3M adjusts faster (monthly), more volatile; 6M smoother (quarterly). Maybank/CIMB favor 3M for responsiveness.[3]
Q3: Can I switch from floating to fixed mid-loan?
A: Yes, via refinancing—OCBC saw 7x switches in 2025. Use Homejourney for seamless multi-bank apps.[2]
Q4: What if rates rise after choosing floating?
A: Payments increase, e.g., +0.5% SORA on S$500k loan adds S$200/month. Buffer 20% extra; fixed locks protection.[1]
Q5: Is floating better for investors?
A: Often yes, for flexibility in areas like Woodlands condos. But fixed suits if holding long-term.[4]
Disclaimer: Rates fluctuate; this isn't financial advice. Verify with MAS/HDB guidelines and Homejourney brokers for your case.
Ready to decide? Compare fixed vs floating securely on Homejourney's bank rates, calculate affordability, and apply via Singpass. Search budget-friendly properties at https://www.homejourney.sg/search. Trust Homejourney for transparent, verified home financing—your safe path to property ownership.
