HDB Loan Interest Rate Trends 2026: What You Need to Know
HDB loan interest rates remain fixed at 2.6% per annum, but this stability masks a dramatic shift in Singapore's mortgage landscape.[1][4] Bank mortgage rates have dropped to historic lows—as low as 1.55% to 1.8% for fixed-rate packages—creating unprecedented refinancing opportunities for HDB flat owners.[3] Understanding these interest rate trends is critical for anyone with an HDB loan, as the gap between HDB and bank rates has widened to nearly 1 percentage point, potentially saving homeowners thousands of dollars annually.
At Homejourney, we prioritize your financial safety by providing transparent, verified information to help you make confident decisions about your mortgage. This guide analyzes current HDB loan interest rate trends, explains how rates are structured, and shows you actionable steps to optimize your financing.
The Current HDB Loan Interest Rate Environment
The HDB concessionary loan rate of 2.6% is pegged at 0.1% above the CPF Ordinary Account (OA) rate, which currently sits at 2.5%.[1][6] This fixed rate provides certainty and predictability—you'll pay the same interest rate for the entire loan tenure, regardless of market conditions. This stability is one of HDB loans' key advantages for risk-averse borrowers.
However, the mortgage market has shifted dramatically. Bank mortgage rates have fallen significantly below the HDB rate. DBS's POSB HDB loan, for example, now offers 1.55% to 1.60% for three-year fixed packages, while other major banks offer rates between 1.55% and 1.8%.[1][3] This represents a savings of approximately 1% per annum compared to the HDB concessionary rate.
To put this in perspective: on a $400,000 loan, refinancing from an HDB loan to a bank loan could save you approximately $3,600 in the first year alone—enough for a family trip to Japan.[3] Over a 30-year tenure, the cumulative savings could exceed $100,000.
Understanding SORA and How It Affects Your Interest Rate
Most bank mortgage rates in Singapore are pegged to SORA (Singapore Overnight Rate Average), a benchmark interest rate set by the Monetary Authority of Singapore.[3] The three-month SORA has fallen dramatically—from exceeding 3.6% throughout 2023 to approximately 1.34% as of October 2025, the lowest level in over three years.[3]
Floating-rate bank loan packages are typically priced at "SORA + spread," where the spread is the bank's margin. For example, a loan might be priced at "3M SORA + 0.25%," meaning if SORA is 1.36%, your rate would be 1.61%. This differs fundamentally from the HDB loan's fixed 2.6% rate, which never changes regardless of SORA movements.
The chart below shows recent interest rate trends in Singapore to help you understand how SORA has evolved:
As you can see from the chart, rates have declined significantly over the past six months. However, experts predict that the bulk of rate declines have already occurred, with only modest further reductions likely given current macroeconomic conditions.[3]
Fixed vs. Floating Rate Mortgages: Which Suits Your Situation?
When refinancing from an HDB loan to a bank mortgage, you'll typically choose between fixed-rate and floating-rate packages. This decision significantly impacts your financial planning:
- Fixed-Rate Mortgages: Your interest rate remains constant for a predetermined period (typically 1-3 years), then reverts to floating. Nearly 9 in 10 HDB homeowners who refinanced chose fixed rates, reflecting a strong preference for payment certainty and easier budgeting.[3] Current fixed rates range from 1.55% to 1.8%.
- Floating-Rate Mortgages: Your rate fluctuates with SORA, meaning lower payments now but potential increases if rates rise. These currently start from around 1M SORA + 0.25% (approximately 1.36%).[6]
Fixed rates provide peace of mind and stable monthly payments, making them ideal if you prefer financial predictability. Floating rates offer lower initial payments but expose you to future rate increases. Given that experts expect only modest rate declines ahead, fixed rates may provide better value for most borrowers.
Why HDB Flat Owners Are Refinancing in Record Numbers
Refinancing activity from HDB loans to bank mortgages has surged dramatically. 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 take-up rates for its POSB HDB loan increase by 13 times compared to the start of the year.[1]
This refinancing wave is driven by three factors: (1) the widening gap between HDB and bank rates, (2) borrowers reaching the end of their lock-in periods from 2022-2023 loans taken at higher rates (3-4%), and (3) competitive incentives from banks including cash rebates ($2,000-$2,800) and legal fee subsidies.[3]
One real example: Ms. Denise Chan refinanced her DBS mortgage to a two-year fixed loan at 1.6%—nearly half her previous 3% rate—saving approximately $500 monthly.[1] These savings are substantial enough to justify refinancing costs for most borrowers.
Key Considerations Before Refinancing from HDB to Bank Loans
While refinancing offers significant savings, it's not a decision to make lightly. Here are critical factors to evaluate:
- No Return to HDB Loans: Once you refinance to a bank loan, you cannot switch back to an HDB loan in the future, even if rates rise dramatically.[1] This is a permanent decision that requires confidence in your financial situation.
- Refinancing Costs: Legal fees, valuation fees, and administrative charges can range from $1,500 to $3,000. However, banks now offer subsidies that can offset these costs entirely.[3]
- Lock-in Periods: Most bank mortgages have 1-3 year lock-in periods with penalties for early repayment or property sale. Ensure your circumstances won't change during this period.
- Rate Volatility Risk: If you choose a floating-rate package, you're exposed to future rate increases. Fixed rates eliminate this risk for their duration.
- Loan Tenure Remaining: Refinancing works best if you have significant tenure remaining. If you're nearing the end of your loan, the savings may not justify the costs.
Homejourney's mortgage brokers can help you evaluate these factors and determine whether refinancing makes financial sense for your specific situation. Use our bank rates comparison tool to see current offers from DBS, OCBC, UOB, HSBC, Standard Chartered, and other major banks side-by-side.
Current Bank Mortgage Rates vs. HDB Rates (February 2026)
Here's how current bank rates compare to the HDB concessionary rate:
- HDB Concessionary Loan: 2.6% fixed for entire tenure
- DBS POSB HDB Loan: 1.55%-1.60% for 3-year fixed, no early repayment penalty[1]
- OCBC Home Loan: 1.7% or lower for 3-year fixed[3]
- Market Range: 1.55%-1.8% for fixed-rate packages; floating rates from 1M SORA+0.25% (approximately 1.36%)[3][6]
The gap of approximately 0.8-1.05 percentage points between HDB and bank rates is historically significant. On a $400,000 loan at 25-year remaining tenure, this gap translates to roughly $250-$350 monthly savings.
What to Expect in 2026: Interest Rate Outlook
Experts predict that the refinancing tailwind will continue into 2026, but with moderation.[3] The three-month SORA is expected to hover between 1.3% and 1.4% by year-end, suggesting that current low rates may persist. However, further significant declines are unlikely given current macroeconomic conditions.
Redbrick Mortgage Advisory predicts that refinancing activity should remain healthy through mid-2026, then moderate as borrowers who locked in at 3-4% rates in 2023-2024 complete their refinancing.[3] By the second half of 2026, refinancing decisions will depend more on prevailing rates and banks' promotional features rather than a broad refinancing wave.
For HDB loan holders, this means: if you're considering refinancing, the current window remains favorable, but waiting may mean missing the most attractive rates. However, if rates are expected to fall further, waiting could save you money—though experts suggest the bulk of declines have already occurred.
How to Make Your Refinancing Decision: A Step-by-Step Framework
Step 1: Calculate Your Potential Savings
Use Homejourney's mortgage calculator to estimate monthly savings by comparing your current HDB rate against available bank rates. Input your loan amount, remaining tenure, and preferred rate type (fixed or floating).
Step 2: Assess Your Lock-in Period Status
Check when your current mortgage lock-in period ends. Refinancing before this date may trigger penalties. Most mortgage advisers recommend refinancing only after lock-in periods expire to avoid unnecessary costs.
Step 3: Compare Bank Offers Side-by-Side
Visit Homejourney's bank rates page to compare current offerings from all major banks. Look beyond the headline rate—consider cash rebates, legal fee subsidies, free conversion options, and flexible features that add real value.
Step 4: Factor in Refinancing Costs
Calculate total refinancing costs (legal fees, valuation, administrative charges) and subtract any bank rebates. Divide this by your monthly savings to determine your "break-even period"—how many months until refinancing pays for itself. If you plan to stay in your property longer than this period, refinancing makes financial sense.
Step 5: Commit to Your Decision
Remember that refinancing to a bank loan is permanent—you cannot return to an HDB loan. Ensure you're comfortable with this decision before proceeding. If you have concerns, speak with Homejourney's mortgage brokers via our loan application portal.
Homejourney's Tools to Help You Navigate HDB Loan Interest Rates
At Homejourney, we're committed to making mortgage decisions transparent and safe. Our platform provides:
- Live SORA Rate Tracking: Monitor 3-month and 6-month SORA rates updated daily to time your refinancing decision perfectly
- Multi-Bank Rate Comparison: Compare current rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, and other major banks in one place
- Mortgage Affordability Calculator: Calculate how much you can borrow based on your income, existing debts, and the TDSR limit
- One-Click Multi-Bank Application: Submit a single application via Singpass and receive personalized rate offers from all partner banks
- Expert Mortgage Broker Support: Access our network of qualified mortgage brokers who provide personalized guidance without conflicts of interest
Visit Homejourney's bank rates page to access these tools and begin your refinancing journey with confidence.
Frequently Asked Questions About HDB Loan Interest Rates
Q: Will HDB loan interest rates increase in 2026?
No. The HDB concessionary loan rate is fixed at 2.6% per annum and does not change. This rate is pegged at 0.1% above the CPF Ordinary Account rate, which is set by CPF Board policy. However, bank mortgage rates may fluctuate based on SORA movements.
Q: Is it too late to refinance in 2026?
Not necessarily. While the bulk of rate declines have occurred, refinancing remains worthwhile if the gap between your current rate and available bank rates exceeds 0.5%. Experts predict favorable refinancing conditions will persist through mid-2026, though activity may moderate in the second half of the year. Use Homejourney's calculator to determine if refinancing saves you money given your specific situation.
Q: What's the difference between fixed and floating rates for refinancing?
Fixed rates (typically 1.55%-1.8% for 1-3 years) provide payment certainty and are preferred by 9 in 10 HDB homeowners who refinance. Floating rates (SORA + spread, currently around 1.36%) offer lower initial payments but expose you to increases if SORA rises. Fixed rates are generally better for budgeting certainty; floating rates suit those who believe rates will continue falling.
Q: Can I switch back to an HDB loan after refinancing to a bank loan?
No. Once you refinance to a bank mortgage, you cannot return to an HDB loan in the future, even if rates rise significantly. This is a permanent decision. Ensure you're comfortable with this before refinancing.
