Choosing between a fixed rate mortgage and a floating rate loan is one of the most important decisions you will make as a Singapore property buyer or investor.
Get this right, and you can save tens of thousands of dollars over your loan tenure. Get it wrong, and you may face cash flow stress, higher interest costs, or refinancing penalties at the worst possible time.
This definitive Homejourney guide explains fixed vs floating rate in the Singapore context, using current data, real examples and practical decision frameworks so you can choose the interest rate type that truly fits your profile.
Table of Contents
- 1. Fixed vs Floating Rate Mortgage: Quick Overview
- 2. How Home Loans Work in Singapore (HDB & Bank)
- 3. What is a Fixed Rate Mortgage?
- 4. What is a Floating Rate Loan? (SORA, Board, FHR)
- 5. Understanding SORA: 3M vs 6M and Why It Matters
- 6. Interest Rate Trends in Singapore (2024–2026)
- 7. Fixed vs Floating: Pros, Cons and Risk Profiles
- 8. Mortgage Rate Comparison: Current Market Snapshot
- 9. How to Choose: A Practical Decision Framework
- 10. Case Studies: HDB Upgrader, Investor, Young Couple
- 11. Refinancing, Repricing and Switching Between Rate Types
- 12. Common Mistakes Singapore Borrowers Make
- 13. How Homejourney Helps You Choose Safely
- 14. FAQs: Fixed vs Floating Rate in Singapore
1. Fixed vs Floating Rate Mortgage: Quick Overview
In Singapore, most bank home loans are either fixed rate for a limited period or floating rate (also called variable rate) tied to a reference like SORA, a board rate, or a fixed deposit rate.[3][5]
Fixed rate mortgage (Singapore definition): The interest rate is locked in for a specified period (usually 2–5 years), and your monthly instalment does not change during this lock-in period.[5]
Floating rate loan: The interest rate moves over time, typically based on a transparent benchmark such as the 3‑month compounded SORA published by MAS, plus a fixed bank spread (margin).[3][4]
Since 2024, most new floating packages have been linked to SORA (Singapore Overnight Rate Average) instead of SIBOR.[3][4] As of late 2025, SORA has fallen sharply from around 3% in early 2025 to near 1.2%, leading to much lower home loan rates and a wave of refinancing.[1][4]
At-a-glance: Fixed vs Floating Rate in Singapore
Throughout this guide, we will use real numbers and examples from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB and other major banks, based on January 2026 conditions.[1][2][4]
2. How Home Loans Work in Singapore (HDB & Bank)
In Singapore, you can finance your property with either an HDB concessionary loan (for eligible HDB flats) or a bank loan from financial institutions regulated by MAS.
HDB Loan (brief context): HDB loans currently charge a concessionary rate pegged at 0.1% above the CPF Ordinary Account interest rate, effectively 2.6% per annum, and are relatively stable according to HDB’s published policies.[HDB]
Many buyers considering fixed vs floating rate are comparing bank loan options either for:
- New HDB BTO or resale flats (eligible for HDB or bank loans)
- Private condos, ECs (after TOP), and landed properties (bank loans only)
- Refinancing from an existing HDB or bank loan to a new bank loan at lower rates[4]
For a deeper comparison of HDB loan vs bank loan in 2026, you can refer to Homejourney’s detailed analyses: HDB Loan vs Bank Loan 2026 Comparison | Homejourney and HDB Loan vs Bank Loan: Which is Better for 2026? | Homejourney .
Regardless of property type, most bank loans are structured as annuity repayment loans: you pay a fixed monthly instalment (subject to rate changes) that covers both principal and interest, calculated so that the loan is fully paid off by the end of the tenure, typically up to 30 years (or 35 years for some private properties, subject to MAS rules).[MAS]
3. What is a Fixed Rate Mortgage?
A fixed rate mortgage in Singapore is a bank loan where the interest rate remains unchanged for a defined fixed period, commonly 2, 3 or 5 years.[3][5]
After the fixed period, the loan usually converts to a floating rate pegged to the bank’s board rate, fixed deposit home rate (FHR), or SORA, unless you refinance or reprice.[3][5]
How fixed rate mortgages work in practice
Suppose you buy a 4‑room HDB resale flat in Tampines for $650,000. You take a 25‑year bank loan of $455,000 (70% loan‑to‑value after down payment using cash and CPF, as discussed in How to Use CPF for HDB Down Payment | Homejourney Guide ).
In early 2026, 2‑year fixed packages from major banks such as DBS, OCBC and UOB are around 1.45%–1.70% p.a. for the first two years, based on market comparisons.[1][2] After that, the loan might move to something like “FHR6 + 1.20%” or “3M SORA + 0.80%”.[2][3]
During the fixed period, your monthly instalment stays constant (subject to minor rounding changes), which makes budgeting predictable.
Pros of fixed rate mortgages
- Budget certainty – Your instalment is unchanged during the fixed period, helpful for young families with childcare costs or single‑income households.[3][5]
- Protection against rate spikes – If SORA or other benchmarks jump suddenly, your monthly payment remains the same until the fixed period ends.[1][4]
- Psychological comfort – Many owners living in mature estates like Toa Payoh or Queenstown value peace of mind more than squeezing out every last dollar of interest savings.
Cons of fixed rate mortgages
- Higher starting rate – In a low-rate environment, fixed packages are usually priced above the cheapest floating packages.[1][2]
- Limited flexibility during lock-in – Breaking the fixed package early (e.g. selling within 2 years) usually triggers a penalty of 1.5–1.75% of the outstanding loan amount.
- May overpay if rates fall further – If SORA keeps dropping, floating borrowers may pay significantly less than your locked‑in fixed rate.[1][4]
4. What is a Floating Rate Loan? (SORA, Board, FHR)
A floating rate loan, also known as a variable rate loan, is a home loan where the interest rate changes over time according to a reference benchmark plus a fixed bank spread.[2][3]
In Singapore, typical floating loan structures include:[3][5]
- SORA‑pegged loans – e.g. 3‑month compounded SORA + spread
- Board rate loans – rate is set internally by the bank
- Fixed Deposit Home Rate (FHR) loans – pegged to the bank’s fixed deposit rates
Today, SORA‑linked packages are the most prominent for new floating rate housing loans.[1][3][4]
How a SORA floating rate package is structured
A typical SORA floating package might look like:
Year 1–2: 3M SORA + 0.75%
Year 3 onwards: 3M SORA + 1.00%
The 3M SORA component is published by MAS based on actual transaction data in the interbank market, while the spread is set by the bank and usually remains constant over the tenure.[3][4]
If 3M SORA is 1.2% and your spread is 0.75%, your effective rate is 1.95% p.a. If SORA drops to 1.0%, your rate becomes 1.75%. If SORA rises to 2.0%, your rate becomes 2.75%.
Pros of floating rate loans
- Lower initial rates – When SORA is low, floating packages tend to offer the lowest headline rates in the market.[1][2][4]
- Benefit from falling rates – If interest rates continue to decline, your instalments reduce without needing to refinance.
- More flexible lock-in options – Some floating packages have shorter (e.g. 1‑year) lock‑ins or no lock‑in, giving you flexibility to refinance soon.[2]
Cons of floating rate loans
- Payment uncertainty – Your monthly instalment can rise if SORA increases, potentially straining your cash flow.[1][3]
- Harder to budget long-term – Households with tight margins may find it stressful when housing costs are unpredictable.
- Emotional stress during volatility – During the rapid rate hikes of 2022–2023, many owners in Punggol and Sengkang saw their monthly instalments jump by hundreds of dollars within a year.
5. Understanding SORA: 3M vs 6M and Why It Matters
SORA (Singapore Overnight Rate Average) is a volume‑weighted average rate of unsecured overnight interbank SGD transactions, computed and published by the Monetary Authority of Singapore (MAS).[3][4]
Most home loans use the compounded SORA over a period (e.g. 3 months or 6 months) as the benchmark rate.
3M vs 6M SORA
As of late 2025, 3M SORA has fallen from about 3% in early 2025 to around 1.2%, reaching a three‑year low.[1][4] This has made floating packages linked to 3M SORA particularly attractive for refinancing HDB and private loans.[1][4]
The chart below shows recent interest rate trends in Singapore, helping you visualise how benchmarks have moved in the last six months:
