HDB Loan Interest Rate Trends Analysis 2025 | Homejourney Guide

HDB Loan Interest Rate Trends Analysis in Singapore starts with one key fact: the HDB concessionary loan rate has been held at 2.6% p.a. for many years, pegged at 0.1% above the CPF Ordinary Account (OA) interest rate of 2.5% p.a., and remains unchanged from 1 April to 30 June 2025 according to CPF Board and HDB.[5][7] This stability makes HDB loans predictable, but as bank mortgage rates have fallen sharply in 2025 to around 1.4–1.8% for many fixed packages, the trade-off between safety and savings has become much more important.[2][4][6]

This article is a focused CLUSTER guide under Homejourney’s broader HDB financing pillar, complementing our main HDB loan and CPF guides such as CPF HDB purchase, CPF down payment HDB, and CPF HDB rules. For a full step-by-step overview of HDB financing, see our main pillar guide Projects Directory and related articles like CPF for HDB Purchase: Complete Usage Guide 2025 | Homejourney CPF for HDB Purchase: Complete Usage Guide 2025 | Homejourney .

How the HDB Loan Interest Rate Is Set

The HDB concessionary loan interest rate is defined very clearly by policy: it is 0.1% above the prevailing CPF OA interest rate.[5][7] CPF OA currently pays a floor of 2.5% p.a., and because the pegged rate is still below that floor, OA remains at 2.5%, and HDB’s housing loan stays at 2.6%.[5] In practice, this rate has not changed for more than a decade, even as global interest rates rose sharply from 2022–2024 and then fell again in 2025.[2][5]

When you talk to HDB officers at the Toa Payoh HDB Hub or at branches like Punggol and Woodlands, they will usually emphasize this stability as a key benefit for first-time buyers who want certainty. From my own experience accompanying buyers to sign their Agreement for Lease at HDB Hub, one of the most common questions is whether the 2.6% can change suddenly. The answer is: it can change if CPF OA’s formula changes, but historically it has been very stable and any changes are announced in advance via CPF and HDB notices.[5]

Historical HDB Loan Interest Rate Trends vs Bank Loans

Over the past decade, the HDB loan rate has stayed constant at 2.6% p.a., while bank mortgage rates have moved up and down with global conditions and local benchmarks like SIBOR (previously) and now SORA.[2][7] According to market data compiled for 2015–2025, HDB’s rate is flat at 2.6% every year, while average bank loan rates ranged roughly from around 1.6–1.8% in the mid-2010s, climbed above 3% in 2022–2023, and have dropped back towards 1.4–1.8% fixed and similar levels for SORA-pegged packages by late 2025.[2][3][4][6]

In 2025, several news reports and bank promotions highlight this gap: fixed-rate loans that were about 3.1% at the start of 2025 have nearly halved to between 1.4% and 1.8%.[4][6] DBS and POSB’s three-year fixed packages around 1.55–1.7% have attracted a surge of HDB flat owners refinancing away from the 2.6% HDB rate to bank loans to save on monthly instalments.[4][6][8] As a result, more HDB owners in neighbourhoods like Sengkang, Yishun, and Jurong are now seriously considering switching to banks.

Homejourney tracks these developments closely through our live bank rate tools on Bank Rates , so users can see at a glance how far bank rates have moved away from the 2.6% HDB rate, and whether the savings justify the extra risk.

Visualising Recent Interest Rate Trends

The chart below shows recent home loan interest rate trends in Singapore, helping you compare the stable HDB concessionary rate against changing bank fixed and SORA-pegged packages over the last six months:

As you review the chart, notice how the HDB rate line is flat at 2.6%, while bank rates trend downward. This visual gap is exactly what drives many existing HDB borrowers in estates like Tampines, Bukit Panjang and Punggol to explore refinancing on Homejourney, especially if they are in the middle years of their 25–30 year tenure when the outstanding loan is still sizeable.

Impact of HDB Rate Stability on CPF HDB Purchase Planning

Because the HDB rate is predictable, you can plan your CPF HDB purchase and monthly cashflow with more certainty. When you use CPF for HDB, your monthly instalment can be fully or partially paid from your CPF OA, subject to CPF HDB rules such as the Valuation Limit and Withdrawal Limit (covered in detail in our guide CPF for HDB Purchase: Complete Usage Guide 2025 | Homejourney CPF for HDB Purchase: Complete Usage Guide 2025 | Homejourney ).

If you are buying a 4-room resale flat in Bedok for around S$650,000 and taking a 25-year HDB loan at 2.6%, your monthly instalment on a 75% loan (about S$487,500, after 25% downpayment from cash and CPF OA) will stay remarkably stable over time, barring CPF policy changes. In practice, that’s one reason many couples I’ve met in mature estates like Queenstown and Ang Mo Kio choose HDB loans even when banks are slightly cheaper—especially if one spouse is self-employed or has variable income and wants the psychological safety of a fixed rate.

Using CPF OA for Flat Purchase and Down Payment at Today’s Rates

Since August 2024, the HDB Loan-to-Value (LTV) limit has been revised down to 75% of the flat price or valuation, whichever is lower.[2] That means your minimum 25% downpayment must be covered by cash, CPF OA for flat purchase, or a mix of both. For many first-time buyers, maximising CPF down payment HDB is critical for preserving cash for renovation and emergencies.

For example, if you buy a new BTO flat in Tengah for S$420,000, your maximum HDB loan is S$315,000 (75%), while the remaining S$105,000 can be fully funded from CPF OA if you have sufficient balance. With the HDB interest rate at 2.6%, and CPF OA earning 2.5% p.a.[5][7], the opportunity cost of using CPF versus keeping it in OA is relatively small, which is why many financial planners in Singapore are comfortable recommending heavy CPF usage for HDB purchases—provided you understand that your retirement savings will be reduced and that you must refund CPF (with interest) if you sell the flat.

To understand how much CPF OA you can safely commit, use Homejourney’s mortgage and eligibility tools on Mortgage Rates and . These calculators show your monthly repayment, how much CPF vs cash you’ll likely use, and the impact of different interest rates if you later refinance to a bank loan.

HDB Loans vs Bank Loans in a Falling Rate Environment

As of 2025, bank mortgage interest rates have dropped below the 2.6% HDB concessionary rate, with some fixed packages around 1.4–1.8% and SORA-pegged packages at similar or slightly lower effective rates.[2][3][4][6] For borrowers currently on HDB loans, this creates a real savings opportunity. In my own client conversations in estates like Punggol and Jurong West, monthly instalments often drop by S$200–S$400 for families refinancing from HDB’s 2.6% to a ~1.5–1.8% bank package, depending on loan size.

However, switching from an HDB loan to a bank loan is a one-way move—you cannot revert to an HDB loan later.[4] Also, bank packages introduce rate volatility: fixed rates typically last 2–5 years, after which they may reset higher, and floating SORA-pegged packages can fluctuate every one to six months depending on the benchmark period. That’s why Homejourney strongly emphasises risk assessment and long-term planning rather than chasing the lowest headline rate.

For an in-depth side-by-side comparison of features beyond just interest rates—such as downpayment, penalties, and flexibility—see our dedicated guide HDB Loan vs Bank Loan 2025 Comparison | Homejourney HDB Loan vs Bank Loan 2025 Comparison | Homejourney .

Decision Framework: When Does a Bank Loan Beat the HDB Rate?

To decide between staying with the HDB loan or moving to a bank loan, use this simple framework Homejourney uses with many first-time buyers and upgraders: