Understanding Singapore's Interest Rate Environment in 2026
Singapore's mortgage landscape is shifting as interest rates stabilize at historically low levels, creating both opportunities and challenges for property buyers and refinancers. The Singapore Overnight Rate Average (SORA), which anchors most floating-rate mortgages, has fallen dramatically from 3% in early 2025 to approximately 1.2% by December 2025[3], while fixed-rate mortgages have nearly halved from 3.1% to between 1.4 and 1.8% depending on loan size[3]. Understanding these trends is essential for making informed mortgage decisions in 2026, and Homejourney's platform provides the tools and transparency you need to navigate this complex landscape safely.
The Monetary Authority of Singapore (MAS) is expected to maintain its current modest appreciation bias throughout 2026, with economists forecasting SORA to trend around 1.00% during the year and potentially rising to 1.50% by 2027[2]. This stability creates a unique window for property buyers to lock in favorable rates before any potential increases later in the year.
What is SORA and How Does It Affect Your Mortgage?
SORA (Singapore Overnight Rate Average) is the volume-weighted average rate of borrowing transactions in Singapore's unsecured overnight interbank SGD cash market[9]. Rather than a rate set by the MAS, SORA reflects actual market conditions and is published daily, making it the most transparent benchmark for Singapore mortgages. Most banks now use 3-month or 6-month SORA as the reference rate for floating-rate home loans, with a spread (typically 0.25% to 0.7%) added on top[3].
The chart below shows recent SORA trends to help you understand how rates have moved and what to expect:
For example, if your bank quotes a rate of "SORA + 0.35%" and the current 3-month SORA is 1.2%, your effective rate would be 1.55%. As SORA changes monthly, your interest payment adjusts accordingly on floating-rate loans, directly impacting your monthly mortgage payments. This transparency is why SORA-based loans have become the standard in Singapore, replacing the older SIBOR benchmark.
Fixed-Rate vs. Floating-Rate Mortgages: Which Should You Choose?
The choice between fixed and floating rates depends on your risk tolerance, financial situation, and economic outlook. Here's how they compare:
| Feature | Fixed-Rate Loans | Floating-Rate Loans |
|---|---|---|
| Current Rate (2026) | 1.4% - 1.8% | SORA + 0.25% - 0.7% |
| Lock-in Period | 2-5 years typical | None; resets monthly |
| Payment Predictability | Fixed monthly payment | Varies with SORA changes |
| Best For | Risk-averse buyers; budget certainty | Rate-sensitive buyers; potential savings |
| Early Repayment | May incur penalties | No penalty with many banks |
Fixed-rate mortgages offer peace of mind with predictable monthly payments throughout the lock-in period. At current rates of 1.4-1.8%, they represent historically attractive levels, particularly if you expect rates to rise later in 2026. However, you sacrifice flexibility—early repayment often triggers penalties, and you cannot benefit if rates fall further.
Floating-rate mortgages tied to SORA currently offer lower rates (around 1.45-1.55% all-in with typical spreads) and maximum flexibility. Many banks, including DBS, now offer floating-rate loans with zero penalty for early repayment or property sale[3]. This makes floating rates ideal if you plan to refinance, upgrade, or sell within a few years. However, you must be prepared for monthly payment fluctuations if SORA rises.
Current Rate Trends and 2026 Forecasts
The dramatic rate decline of 2025 was driven by US Federal Reserve cuts and strong domestic liquidity in Singapore[3]. Looking ahead to 2026, the rate environment is expected to stabilize rather than continue falling. The US Federal Reserve has signaled only marginal easing in 2026—potentially just one quarter-point cut—with Fed Chair Jerome Powell explicitly stating that rate hikes are unlikely[3]. This "wait-and-see" approach means Singapore rates will likely remain stable, with SORA projected to hover around 1.00% throughout 2026[2].
Economists surveyed by MAS expect core inflation to remain modest at 1.3% in 2026, well within the MAS's comfort zone of 0.5% to 1.5%[1]. This suggests MAS will maintain its current policy stance through at least mid-2026, with OCBC's base case being for MAS to hold policy until end-July unless inflation spikes[1]. The key takeaway: major rate swings are unlikely, but modest upward pressure is possible in the second half of 2026.
Banks are expected to continue offering competitive packages in early 2026, particularly in Q1 when competition for market share intensifies[3]. This is an ideal time to lock in rates through Homejourney's bank rates comparison page, where you can compare current offers from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and other major lenders side-by-side.
HDB Loan vs. Bank Financing: A Critical Decision Point
For HDB flat buyers, a significant shift is underway. The HDB concessionary loan rate remains fixed at 2.6%, pegged to the CPF Ordinary Account rate plus 0.1%[3]. However, bank mortgage rates have now fallen below this threshold—DBS's POSB HDB loan, for example, carries a 1.55% fixed rate with no early repayment penalty[3]. This creates a powerful incentive for HDB owners to refinance from HDB loans to bank financing.
If you're considering switching from an HDB loan to a bank mortgage, understand this is a one-way decision—once you leave the HDB loan scheme, you cannot return to it in future[3]. However, the potential savings are substantial. On a $300,000 loan, the difference between 2.6% and 1.55% saves approximately $3,150 annually in interest payments. Homejourney's mortgage calculator can help you model these savings and determine if refinancing makes sense for your situation.
Why Apply for Your Mortgage via Homejourney?
Navigating Singapore's mortgage market involves comparing rates across multiple banks, gathering documentation, and managing multiple applications—a process that can be overwhelming and time-consuming. Homejourney simplifies this through a trusted, transparent platform designed with your safety and convenience in mind.
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