HDB Loan Interest Rate Trends Analysis in 2025 shows a clear pattern: the HDB concessionary loan rate has stayed unchanged at 2.6% p.a., while bank home loan rates have fallen to around 1.4%–1.8% p.a., making refinancing from HDB to bank loans increasingly attractive for many flat owners.[4][5][6]
This cluster guide focuses specifically on understanding HDB loan interest rate trends, how they compare to bank and SORA-based packages, and how to combine this analysis with HDB grant financing (including CPF housing grant, EHG and PHG) to make safer, smarter decisions. For a full end-to-end overview of HDB financing and eligibility, you can refer to the main pillar guide on HDB & bank home loans on Homejourney .
HDB Loan Interest Rate: How It Works and Why It’s So Stable
The starting point for any HDB Loan Interest Rate Trends Analysis is understanding how the HDB rate is set. HDB loans are pegged at 0.1% above the CPF Ordinary Account (OA) interest rate, which has a floor of 2.5% p.a. set by the Government.[4] This means:
- CPF OA floor rate: 2.5% p.a.[4]
- HDB concessionary loan rate: 2.6% p.a. (2.5% + 0.1%)[4]
- The rate is reviewed quarterly, but has stayed at 2.6% for over a decade.
According to CPF Board’s official announcement for April–June 2025, the OA rate remains at 2.5%, and the HDB concessionary rate continues at 2.6% p.a..[4] If you’ve owned a flat in Bedok or Sengkang since the 2010s, you’ll have noticed your HDB instalment barely changed even during the sharp global interest rate hikes in 2022–2023—this stability is exactly why many risk‑averse buyers still prefer HDB loans.
However, this stability also means that HDB loan rates do not fall when global rates go down. In 2025, bank loan packages have become cheaper than the 2.6% HDB rate, creating a widening gap that flat owners must evaluate carefully.[2][5][6]
HDB Loan vs Bank Loan: 2025 Interest Rate Trends
Over the last 10 years, HDB’s 2.6% rate has been flat, while bank rates have moved through several cycles.
Historical Pattern (2015–2024)
Based on market data from mortgage advisors and bank rate histories, the broad pattern looks like this:[2]
- 2015–2019: Average bank home loan rates around 1.6%–2.1% p.a. (cheaper than HDB’s 2.6%).[2]
- 2020–2021: Covid period pushed bank rates close to ~1.2%–1.3% p.a.[2]
- 2022–2023: Global rate hikes drove bank packages above 3%–4%, making HDB’s 2.6% temporarily more attractive.[2]
- Late 2024 onwards: SORA and fixed-rate packages started easing again as markets priced in future cuts.[2][3][5]
By early 2025, bank fixed rates were about 3.1%, but by late 2025 they have fallen sharply to between ~1.4% and 1.8% depending on loan amount and package.[3][5][6] A key CNA report noted that owners are increasingly refinancing from HDB to cheaper bank loans, with fixed and floating packages in the 1.55%–1.8% range, versus HDB’s 2.6%.[5][6]
Some promotions for HDB home loans from financial institutions (e.g. Hong Leong Finance) show first‑three‑year fixed rates as low as 1.85% p.a. for larger loans, before reverting to higher board rates.[1] Actual rates depend on loan size, tenure and your profile, which is why Homejourney’s live bank rate comparison is critical for any serious analysis Bank Rates .
Fixed vs Floating: How SORA Packages Compare to HDB’s 2.6%
Most bank loans today are either fixed-rate packages (e.g. 1.4%–1.8% for 2–3 years) or floating packages pegged to SORA.[3][5] Understanding SORA is essential if you are analysing beyond the HDB loan.
What is SORA and Why It Matters
SORA stands for the Singapore Overnight Rate Average, a volume‑weighted average of overnight interbank transactions administered by MAS. Many home loans use 3‑month (3M) or 6‑month (6M) Compounded SORA as the benchmark, plus a bank margin (e.g. 3M SORA + 0.60%).[2][3]
- 3M SORA: resets every 3 months; more responsive, slightly more volatile.
- 6M SORA: resets every 6 months; slower changes, but you live with higher or lower rates longer.
In 2025, market commentary suggests that key SORA benchmarks have eased substantially compared to their 2023 peaks, with some packages now effectively pricing at ~1.35%–1.6% p.a. (for larger loans) when you add the margin.[3][5] For someone staying in a 5‑room HDB in Punggol with a $450,000 outstanding loan, that is a meaningful saving compared with 2.6%.
Fixed vs Floating vs HDB: Practical Comparison
On the ground, in estates like Yishun or Tampines, many owners I’ve spoken to over coffee at the kopitiam beside the MRT mention a rule of thumb: “If the bank spread is more than 1% cheaper than HDB and you’re comfortable with some risk, it’s worth a serious look.” That’s roughly the gap we are seeing in late 2025.
Worked Example: Monthly Instalment – HDB vs Bank in 2025
Assume you are buying a 4‑room resale flat in Bukit Batok for $600,000, with a 25‑year loan of $450,000 (after grants and CPF). Here’s how the instalments compare:
- HDB Loan at 2.6% p.a. – Monthly instalment roughly ≈ $2,040.
- Bank Fixed at 1.6% p.a. – Monthly instalment roughly ≈ $1,800.
That’s about $240 per month difference, or almost $2,880 a year. Over a 3‑year fixed period, savings could exceed $8,000, assuming rates stay near current levels. These are ballpark numbers for illustration; you should always use a proper calculator.
On Homejourney’s mortgage tools, you can simulate these differences easily:
- Use the mortgage calculator to test different rates and tenures Mortgage Rates .
- Check live bank rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB and more on one page Bank Rates .
- See how much you can borrow safely with the eligibility calculator before you even contact an agent Bank Rates .
