HDB Loan Interest Rate Trends in 2026: What You Need to Know
The HDB concessionary loan rate remains fixed at 2.6% per annum, but the real story in Singapore's mortgage market is the widening gap between HDB and bank loan rates—and what this means for your finances. As of January 2026, bank loan rates have dropped to between 1.55% and 1.8% for fixed-rate packages, creating unprecedented refinancing opportunities for HDB homeowners.[1][2] Understanding these interest rate trends is crucial for making informed decisions about whether to switch from an HDB loan to a bank loan, or when to refinance your existing mortgage.
At Homejourney, we believe that informed homeowners make better financial decisions. This guide breaks down the current HDB loan interest rate landscape, explains why rates are moving as they are, and provides actionable insights to help you determine the best financing strategy for your situation.
Understanding HDB Loan Interest Rates vs Bank Loan Rates
The HDB loan interest rate structure differs fundamentally from bank loans, and this difference has significant implications for your monthly repayments. The HDB concessionary rate of 2.6% is technically a floating rate pegged at 0.10% above the CPF Ordinary Account (OA) interest rate, but it has remained remarkably stable for over a decade.[1] This stability provides predictability—your monthly repayment remains constant regardless of market conditions.
Bank loan rates, by contrast, fluctuate based on market benchmarks. Most banks now price their home loans using the Singapore Overnight Rate Average (SORA), which serves as the primary reference rate for floating-rate mortgages.[3] Fixed-rate bank packages typically lock in rates for one to three years before reverting to floating rates. The chart below illustrates how interest rates have evolved in Singapore's mortgage market:
As you can see from recent trends, bank loan rates have compressed significantly, with many institutions now offering rates starting from 1.55% for three-year fixed packages—more than 1% lower than the HDB rate.[2] This represents a historic opportunity for HDB homeowners to refinance at substantially lower costs.
The SORA Factor: How Benchmark Rates Affect Your Mortgage
SORA (Singapore Overnight Rate Average) is the benchmark that determines floating-rate mortgage pricing for most Singapore banks. Understanding SORA movements is essential because it directly impacts your monthly repayments if you choose a floating-rate bank loan.[3] The three-month SORA, which banks commonly use to price home loans, has fallen to around 1.34% per annum—the lowest rate in more than three years.[3]
This decline has been dramatic: for most of 2023, the three-month SORA exceeded 3.6%, but it has since compressed by more than 2 percentage points.[3] This compression explains why refinancing activity has surged among HDB homeowners—many who took higher-rate bank packages in 2022-2023 are now reaching the end of their lock-in periods and can refinance at substantially lower rates.
On Homejourney's bank rates page, you can track live 3-month and 6-month SORA rates updated daily, helping you time your refinancing decisions perfectly. This real-time transparency ensures you're never making decisions based on outdated information.
Current Market Rates: HDB vs Bank Loan Comparison
As of January 2026, the rate differential between HDB and bank loans has widened to unprecedented levels. Here's what current rates look like across Singapore's major lenders:
- HDB Concessionary Loan: 2.6% per annum (fixed)
- DBS POSB HDB Loan: 1.55% per annum (three-year fixed, no early repayment penalty)
- OCBC Bank: 1.7% per annum or lower (three-year fixed)
- Floating-rate packages: 1M SORA + 0.25% to 0.35% spread (currently around 1.36% to 1.46%)
For a typical S$400,000 HDB loan, refinancing from an HDB loan to a bank loan at 1.55% would save approximately S$3,600 in the first year alone.[2] Over the life of a 25-year mortgage, these savings compound significantly.
To compare rates from all major banks—including DBS, OCBC, UOB, HSBC, Standard Chartered, and Maybank—use Homejourney's bank rates comparison tool. You can calculate your monthly payments instantly and see exactly how much you'd save with each option.
Why HDB Homeowners Are Refinancing in Record Numbers
Refinancing activity from HDB loans to bank loans has accelerated dramatically in 2025 and is expected to remain strong through 2026. OCBC Bank reported that HDB homeowners switching to their home loans grew by more than 60% in the first nine months of 2025 compared to the same period in 2024.[3] DBS saw its POSB HDB loan take-up rate increase 13 times in October and November compared to the start of 2025.[2]
This surge reflects several factors: the significant rate differential, banks offering cash rebates (S$2,000-S$2,800) and legal fee subsidies to reduce refinancing costs, and flexible loan features such as free conversion options after the first year.[3] Nearly nine in 10 HDB homeowners who refinanced opted for fixed-rate packages, reflecting a strong preference for payment certainty and easier budgeting.[3]
However, there's a critical consideration: once you switch from an HDB loan to a bank loan, you cannot return to an HDB loan in the future. This permanent decision requires careful evaluation of your financial situation and risk tolerance.
Fixed vs Floating: Which Rate Type Should You Choose?
When refinancing or taking a new bank loan, you'll face a choice between fixed and floating rates. Each option carries different advantages and risks:
Fixed-Rate Packages (Preferred by 90% of HDB refinancers): Your interest rate remains constant for the lock-in period (typically 1-3 years), providing payment certainty and simplifying budgeting. After the lock-in period, most packages revert to floating rates. The advantage is predictability; the disadvantage is that if rates fall further, you're locked in at a higher rate unless you refinance again (though many packages now offer free repricing options).
Floating-Rate Packages: Your rate fluctuates with SORA, meaning your monthly repayment changes as benchmark rates move. If rates fall, you benefit immediately; if rates rise, your costs increase. Floating rates are currently attractive given SORA's historical lows, but they carry interest rate risk. This option suits borrowers with higher risk tolerance and flexible budgets.
Most financial experts recommend fixed-rate packages for HDB homeowners refinancing, particularly given the current rate environment. The certainty of fixed payments aligns with Homejourney's commitment to helping you make safe, informed financial decisions.
Interest Rate Outlook: What to Expect in 2026
Mortgage experts project that the three-month SORA will hover between 1.3% and 1.4% by year-end 2026, suggesting that the bulk of rate declines has already occurred.[3] While further rate cuts are possible if the US Federal Reserve continues easing policy and Singapore inflation remains low, these declines are likely to be modest given current macroeconomic conditions.[3]
Refinancing activity is expected to remain healthy through 2026, but may moderate from mid-year onward as borrowers who locked in at 3-4% rates in 2023-2024 complete their refinancing.[3] This suggests that if you're considering refinancing, acting sooner rather than later may be advantageous—you'll benefit from current promotional offers and avoid the potential rush later in the year.
Making Your Decision: A Practical Framework
Deciding whether to switch from an HDB loan to a bank loan requires evaluating several factors:
- Savings Potential: Calculate your potential monthly savings using Homejourney's mortgage calculator. For most HDB homeowners, the 1% rate differential translates to substantial savings over 20-25 years.
- Remaining Loan Term: The longer your remaining loan term, the greater your total savings from refinancing. If you're in the final 5-10 years of your mortgage, refinancing may not be worthwhile after accounting for legal and processing fees.
- Lock-in Period Commitment: Ensure you're comfortable being locked into a bank loan for the fixed-rate period. If you plan to sell your property within 3 years, verify that your package allows penalty-free early repayment or sale.
- Risk Tolerance: If you're risk-averse and value payment certainty, a fixed-rate package is appropriate. If you can tolerate rate volatility and believe rates will continue falling, a floating-rate package may offer better long-term value.
- Refinancing Costs: Factor in legal fees (typically S$800-S$1,200) and processing fees. Many banks now subsidize these costs, so confirm current offers before deciding.
To simplify this analysis, Homejourney's mortgage eligibility calculator lets you instantly see your borrowing capacity and compare monthly repayments across different rate scenarios. You can also submit one application through our platform and receive personalized rate offers from all major partner banks, eliminating the need to approach each bank individually.
Switching From HDB to Bank Loan: Important Considerations
If you decide to refinance from an HDB loan to a bank loan, keep these critical points in mind:
- No Return to HDB Loans: This is a one-way decision. Once you switch to a bank loan, you cannot revert to an HDB loan in the future, regardless of circumstances. Ensure this aligns with your long-term financial plans.
- Loan-to-Value (LTV) Limits: Bank loans typically cap LTV at 75% for first properties (compared to 90% for HDB loans), meaning you may need a larger down payment if refinancing a second property.
- Free Conversion Options: Many banks now offer free repricing or conversion options after the first year, allowing you to switch from fixed to floating (or vice versa) without refinancing costs. This flexibility provides valuable optionality as rates evolve.
- Promotional Offers: Current market competition means banks are offering cash rebates (up to S$2,800 for loans above S$1.5 million) and legal fee subsidies. Compare these offers carefully—they can offset refinancing costs entirely.
For comprehensive guidance on switching from HDB to bank loans, refer to Homejourney's detailed guide: Switch HDB Loan to Bank Loan: Should You Do It in 2026? | Homejourney
How Homejourney Helps You Navigate Rate Trends
At Homejourney, we've built our platform with your financial safety and transparency as core priorities. Here's how we help you make confident decisions about HDB loan refinancing:
- Real-Time Rate Tracking: Our bank rates page displays live interest rates from all major lenders, updated daily. You'll never make decisions based on outdated information.
- Side-by-Side Comparison: Compare rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Public Bank, Hong Leong Bank, and Citibank in one place.
- Instant Eligibility Calculator: Our mortgage calculator shows your borrowing capacity and calculates monthly repayments across different rate scenarios, helping you understand what you can afford.
- Multi-Bank Application: Submit a single application and receive personalized rate offers from all partner banks. Our Singpass integration auto-fills your details in seconds, and banks can verify your income and employment data instantly for faster approval.
- Expert Guidance: Apply through our loan application to connect with Homejourney Mortgage Brokers who provide personalized guidance tailored to your financial situation.
Start comparing rates and calculating your savings on Homejourney's Bank Rates page today.
FAQ: HDB Loan Interest Rate Trends and Refinancing
Q: Can I switch back to an HDB loan after refinancing to a bank loan?
No. Once you switch from an HDB loan to a bank loan, you cannot return to an HDB loan in the future. This is a permanent decision, so ensure you're comfortable with this before refinancing. However, given current rate differentials, most financial advisors recommend refinancing if you have a long remaining loan term.
Q: How much can I save by refinancing from HDB to a bank loan?
Savings depend on your loan amount and remaining term. For a S$400,000 loan, refinancing from 2.6% to 1.55% saves approximately S$3,600 in the first year.[2] Over a 25-year mortgage, total savings can exceed S$50,000. Use Homejourney's mortgage calculator to calculate your specific savings.
Q: Should I choose a fixed or floating rate bank loan?
Nearly 90% of HDB homeowners who refinanced chose fixed-rate packages, reflecting a preference for payment certainty.[3] Fixed rates are ideal if you value predictable monthly repayments and easier budgeting. Floating rates suit borrowers with higher risk tolerance who believe rates will continue falling. Most experts currently recommend fixed rates given the stable rate environment.
