HDB Loan Interest Rate Trends in 2026: What You Need to Know
The HDB loan interest rate remains fixed at 2.6% per annum, but this is no longer the most competitive option for borrowers[1][4]. Bank mortgage rates have dropped to between 1.55% and 1.8% for fixed-rate packages, creating a significant gap that's driving record refinancing activity among HDB homeowners[2][3]. Understanding these trends is crucial whether you're a first-time buyer, property upgrader, or homeowner considering refinancing.
This cluster article explores current HDB loan interest rate trends, why rates are moving the way they are, and what these changes mean for your property financing decisions. If you're considering upgrading from HDB to private property or refinancing your existing HDB loan, this analysis will help you understand your options through Homejourney's trusted perspective on Singapore's mortgage market.
Understanding HDB Loan Interest Rates
The HDB loan interest rate is pegged at 0.1% above the CPF Ordinary Account (OA) interest rate[1][4]. Currently, with the CPF OA rate at 2.5%, the HDB rate sits at 2.6%. Unlike bank loans that fluctuate with market conditions, the HDB rate has remained remarkably stable for over a decade[1].
This stability comes from the HDB's role as a government housing agency. The rate is designed to be concessionary—meaning it's subsidized by the government to help Singaporeans afford homeownership. However, this fixed approach means HDB rates don't benefit when market rates fall, which is exactly what's happening in 2026.
The key difference between HDB and bank loans lies in how rates are structured. HDB offers a single, fixed rate for all borrowers. Banks, conversely, offer both fixed-rate packages (typically 1-3 years) and floating-rate packages pegged to benchmarks like SORA (Singapore Overnight Rate Average)[3][4].
Current Bank Loan Rates vs HDB Rates
The interest rate gap between HDB and bank loans has widened significantly. Here's the current landscape:
- HDB Concessionary Loan: 2.6% per annum (fixed)[1]
- Bank Fixed-Rate Packages: 1.55% to 1.8% per annum[2][3]
- Bank Floating-Rate Packages: Starting from 1M SORA + 0.25% (approximately 1.36%)[6]
This means borrowers refinancing from HDB to bank loans could save approximately S$3,600 in the first year on a S$400,000 loan[3]. For a S$500,000 loan, annual savings could exceed S$5,000—enough to cover significant property maintenance or investment opportunities.
DBS Bank's POSB HDB home loan exemplifies this trend, offering 1.55% for three-year fixed packages with no early repayment penalties[2][7]. This flexibility is crucial for homeowners who might sell their property or refinance again if rates drop further.
Why Are Bank Rates Lower Than HDB Rates?
Bank rates have fallen to 3-year lows due to several macroeconomic factors[2][3]. The 3-month SORA rate, which banks use to price floating-rate packages, has dropped from over 3.6% in most of 2023 to below 1.4% as of late 2025[3]. This decline reflects expectations that the US Federal Reserve will continue cutting interest rates, local inflation remains low, and the Singapore dollar stays strong[3].
Banks are also competing aggressively for refinancing business. Beyond lower rates, they're offering cash rebates, legal fee subsidies, and flexible features like free conversion options after the first year[3]. This competition benefits borrowers significantly.
The HDB rate, being government-subsidized and fixed, doesn't move with market conditions. While this provides certainty, it also means HDB borrowers miss out when market rates decline—which is the current environment.
SORA Trends and What They Mean for Your Mortgage
SORA (Singapore Overnight Rate Average) is the benchmark rate that most Singapore banks now use to price floating-rate home loans[3]. Understanding SORA trends helps you predict how your monthly payments might change if you choose a floating-rate package.
The three-month SORA rate has declined dramatically from its 2023 peak of 3.6%+ to around 1.34% per annum as of late 2025[3]. Experts predict it will hover between 1.3% and 1.4% through end of 2026[3]. This low level is historically significant—it's the lowest in more than three years[3].
The chart below shows recent interest rate trends in Singapore to help you understand how SORA and bank rates have evolved:
For borrowers, this means floating-rate packages starting from SORA + 0.25% (approximately 1.36%) are genuinely competitive[6]. However, there's a risk: if SORA rises in future years, your monthly payments increase. This is why many HDB homeowners refinancing are choosing fixed-rate packages instead—nearly nine in 10 refinancers opted for fixed rates in recent months[3].
Fixed vs Floating Rate Packages: Which Should You Choose?
The choice between fixed and floating rates depends on your risk tolerance, financial situation, and market outlook. Here's how to evaluate:
Homejourney's analysis of current market data shows that fixed-rate packages are the safer choice in 2026 for most borrowers. While floating rates are currently lower, the certainty of fixed rates aligns better with long-term financial planning. Additionally, after your fixed-rate lock-in period ends, you can reassess and refinance again if rates have fallen further.
Refinancing Trends: Why HDB Owners Are Switching to Banks
Refinancing activity among HDB homeowners has surged dramatically. DBS saw take-up rates for POSB HDB loans increase by 13 times from the start of 2025 to October-November[2]. This trend reflects a clear pattern: HDB owners who originally took higher fixed-rate bank packages in 2022-2023 are reaching the end of their lock-in periods and refinancing at substantially lower rates[3].
Important consideration: Once you refinance from an HDB loan to a bank loan, you cannot switch back to an HDB loan in the future[2][3]. This is a permanent decision. However, if interest rates continue to fall as predicted, the long-term savings often justify this trade-off.
For example, a homeowner who refinanced with DBS last month moved from a 3% rate to 1.6%—saving approximately S$500 monthly[2]. Over a 25-year loan, that's S$150,000 in savings. Banks are also offering cash rebates and legal fee subsidies to make refinancing more attractive, further reducing the net cost of switching[3].
Redbrick Mortgage Advisory predicts refinancing will remain healthy through 2026 but could moderate from mid-year as borrowers with 2023-2024 loans have already refinanced[3]. HDB loan refinancing activity is expected to stay steady, suggesting the market has reached a natural equilibrium[3].
HDB to Private Property Upgrade: Financing Implications
If you're considering upgrading from HDB to private property, understanding current interest rate trends is critical to your decision. Private property buyers typically use bank loans exclusively—HDB loans are only available for HDB properties[1].
The good news: bank rates are at 3-year lows, making private property financing more affordable than it has been in years. The challenge: private property loans have a lower Loan-to-Value (LTV) limit of 75% for first properties, compared to 90% for HDB loans[1]. This means you'll need a larger down payment.
However, when you combine lower bank interest rates with the potential proceeds from selling your HDB flat, the upgrade becomes more financially feasible. For detailed guidance on upgrade financing strategies, see Homejourney's comprehensive Sell HDB Buy Private: Ultimate Upgrade Financing Guide.
To assess your borrowing capacity for a private property, use Homejourney's mortgage calculator, which instantly shows how much you can borrow based on your income and existing debts. Then compare rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and other banks on Homejourney's bank rates page to find your best option.
2026 Interest Rate Outlook and Predictions
Looking ahead, experts predict modest further rate declines are possible but unlikely to be dramatic[3]. The bulk of the rate decline has already occurred, according to Cashew Mortgages' managing director[3]. Here's what to expect:
- SORA Rates: Expected to hover between 1.3% and 1.4% through end of 2026[3]
- Bank Fixed-Rate Packages: Likely to remain between 1.55% and 1.8%, with potential for slight declines[3]
- HDB Rate: Will remain at 2.6% unless the CPF OA rate changes[4]
- Refinancing Activity: Expected to moderate from mid-2026 as most borrowers with high-rate loans have already refinanced[3]
The key takeaway: if you're considering refinancing or taking a new loan, the current market environment is favorable. Rates are unlikely to fall dramatically further, but they're also unlikely to rise significantly in the near term. This stability makes 2026 a reasonable window for locking in rates, particularly fixed-rate packages.
How Homejourney Helps You Navigate Interest Rate Trends
At Homejourney, we prioritize your safety and trust by providing transparent, accurate mortgage information and tools. Here's how we help you navigate current interest rate trends:
- Live SORA Tracking: Track 3-month and 6-month SORA rates updated daily on our bank rates page. Understanding SORA trends helps you time your refinancing or loan application decisions.
- Side-by-Side Rate Comparison: Compare rates from all major banks—DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and more—in one place. No need to visit multiple bank websites.
- Instant Mortgage Calculator: Calculate your borrowing power and monthly payments based on current rates. See exactly how much you can afford before applying.
- Multi-Bank Application: Submit one application through Homejourney and receive personalized rate offers from all partner banks. Save time and compare offers easily.
- Singpass Integration: Apply via Singpass for instant income and employment verification. Faster approvals mean you can lock in rates quickly.
Our commitment to user safety means we verify all information, maintain transparency about how rates work, and help you make confident decisions backed by current data.
Key Takeaways and Action Steps
If you have an HDB loan at a higher rate: Consider refinancing to a bank loan. The savings are substantial—potentially S$3,600+ in year one on a S$400,000 loan. Compare offers from multiple banks using Homejourney's bank rates page to find the best deal.
If you're a first-time HDB buyer: You have a choice between HDB loans (2.6%) and bank loans (1.55%-1.8%). Bank loans offer better rates, but HDB loans allow higher borrowing (90% LTV vs 75%). Calculate your options using our mortgage calculator.
If you're upgrading to private property:
