Singapore SORA Rate Outlook 2026: What Homeowners Should Know | Homejourney Guide

Singapore's SORA rate 2026 outlook will shape how much you pay on your home loan over the next few years. If you're buying a flat in Punggol, refinancing a condo in Queenstown, or planning an investment unit near Tanjong Pagar MRT, understanding the SORA forecast and mortgage rate trend is no longer optional – it directly affects your monthly cash flow and long‑term risk.

This Homejourney pillar guide brings together the latest data, forecasts, and on‑the‑ground mortgage experience in Singapore to help you decide whether to choose 3M SORA, 6M SORA or fixed rates as we head towards 2026. Homejourney's mission is to create a safe, transparent environment for property decisions – from verified listings to bank‑grade security for your loan applications – so you can move forward with confidence.

1. SORA Basics: What Every Singapore Homeowner Must Know
2. 2024–2026 Interest Rate Outlook Singapore: Big Picture
3. SORA Forecast 2026: Data, Predictions & Expert Views
4. 3M SORA vs 6M SORA Prediction and Impact on Your Instalments
5. Fixed vs Floating (SORA) in 2026: Which Is Safer for You?
6. How Banks Price SORA Home Loans (Spreads, Margins, Lock‑ins)
7. Decision Framework: How to Choose the Right Package for 2026
8. Practical Payment Scenarios for HDB, Condo & Investment Units
9. How to Use Homejourney Tools to Time Your Move & Protect Yourself
10. FAQs: Singapore SORA Rate Outlook 2026

1. SORA Basics: What Every Singapore Homeowner Must Know

1.1 What is SORA and why it replaced SIBOR

The Singapore Overnight Rate Average (SORA) is the volume‑weighted average rate of unsecured overnight interbank SGD transactions, administered by the Monetary Authority of Singapore (MAS).[1] MAS has fully transitioned new retail floating‑rate home loans away from SIBOR toward SORA‑pegged packages because SORA is based on actual transactions and is considered more robust and transparent.

In practical terms for homeowners:

Most new floating‑rate housing loans from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Citibank and others are now pegged to compounded SORA (usually 3‑month or 6‑month SORA).
Your instalment is no longer based on a bank's "board rate" that can move without a clear market reference, but on a transparent index published by MAS daily.

1.2 1M, 3M, 6M compounded SORA – how they work

When you see bank packages like "3M SORA + 0.80%" or "6M SORA + 0.65%", the first part is the floating reference rate, and the second is the bank's fixed spread (margin).

1‑month compounded SORA: resets every month, more responsive but more volatile.
3‑month compounded SORA (3M SORA): resets every quarter, currently the most common benchmark for home loans in Singapore.[8]
6‑month compounded SORA (6M SORA): resets every six months, moves slower and offers more short‑term payment stability but reacts later to rate cuts.

The "compounded" part simply means the rate is calculated by compounding overnight SORA over the chosen period (1, 3 or 6 months) – this smooths out day‑to‑day noise.

1.3 How SORA has behaved recently

After peaking above 3.6% in 2023, 3M SORA has fallen sharply as global rates eased and MAS maintained a stable Singapore dollar policy.[7] By late 2025, 3M SORA has dropped to around the low‑1% range – Trading Economics data shows overnight SORA at about 1.33–1.35% in late 2025.[1] Channel NewsAsia also reported SORA falling from about 3% in early 2025 to around 1.2% by mid‑December, the lowest level since 2022.[6]

On the ground, this means that:

Owners of resale HDB flats in towns like Sengkang and Bukit Batok who refinanced from HDB 2.6% to SORA packages in 2024–2025 are now often paying below 2% interest.
Investors with leveraged units in city‑fringe areas like Geylang or Balestier have seen improved rental yield because their financing cost has dropped.

2. 2024–2026 Interest Rate Outlook Singapore: Big Picture

2.1 MAS stance and inflation outlook

Unlike many central banks, MAS conducts monetary policy by managing the Singapore dollar exchange rate rather than setting a domestic policy interest rate. However, MAS’ outlook still heavily influences SORA and local funding costs.

Trading Economics notes that Singapore's overnight rate is projected to trend around 1.00% in 2026 and around 1.50% in 2027 based on macro models and analyst expectations.[1] MAS expects core inflation to stay low, forecasting 0.5–1.5% in 2025, with a mild increase to 0.5–1.5% in 2026 as GDP returns toward trend.[1]

In simple terms: MAS currently sees low inflation and moderate growth, giving room for relatively low short‑term rates through 2026 unless there is a major global shock.

2.2 US Federal Reserve and global rates – why Singapore is a "price taker"

Singapore is an open, trade‑dependent economy. As many local banks fund themselves partly in USD and global markets, SORA tends to follow the broad direction of US interest rates over time.[3] Mortgage specialists in Singapore generally expect that as the US Federal Reserve cuts rates gradually, SORA will remain soft through 2025–2026.[2][4]

However, recent Fed guidance suggests a slower easing path, with only modest cuts signalled for 2026.[6] This is why local experts quoted in Channel NewsAsia caution that the "era of pre‑emptive easing is over" and that current low levels of SORA may already price in much of the expected Fed cuts.[6]

2.3 What this means for Singapore mortgage rate trend into 2026

Putting these pieces together, the consensus view among banks and analysts is:

SORA is likely to stay low but not fall dramatically further into 2026, unless there is a deeper global downturn.[2][6][7]
Home loan packages (both SORA‑pegged and fixed) are already near three‑year lows, and banks are competing actively on spreads, subsidies and cash rebates.[6][7]
The mortgage rate trend for 2025–2026 is a "low plateau" rather than a sharp downtrend or spike – helpful for planning.

For example, OCBC economists forecast 2026 GDP growth of around 2.0% and CPI inflation around 1.3%, with short‑end SORA rates fluctuating at low levels in line with this benign environment.[5]

3. SORA Forecast 2026: Data, Predictions & Expert Views

3.1 Key published SORA projections for 2026

While no one can predict SORA with certainty, several public forecasts provide useful reference points for your planning:

Source	Metric	Indicative View for 2026
Trading Economics	Overnight SORA	Around 1.0% in 2026, rising to 1.5% in 2027[1]
MUFG Research	3M compounded SORA	To "remain soft through 2026" after falling to ~1.37% by end‑2025[2]
Straits Times (citing local banks)	3M SORA	Expected to hover around 1.3–1.4% by end‑2025, with refinancing tailwind extending into 2026[7]

These are not guarantees, but they align around a 2026 environment where SORA stays low, roughly around 1–1.5%, assuming no severe global shock.

3.2 Translating SORA forecasts into home loan rates

Home loan interest = compounded SORA + bank spread. For example, if:

3M SORA in 2026 averages 1.2%, and
Your bank spread is 0.80%,

Then your effective rate is about 2.0% p.a.

Banks in Singapore typically offer SORA spreads in the range of about 0.60–1.00% depending on loan size, property type, and promotion period (based on prevailing market packages observed in 2024–2025 across DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB and others). In a low SORA environment, spreads become more important – a 0.20% difference in spread can matter more than a small forecast difference in SORA.

3.3 Risk scenarios homeowners should consider

When planning around the 2026 SORA forecast, it is safer to think in scenarios rather than a single point estimate:

Base case: SORA stays around 1–1.5%. Your total mortgage rate likely in 1.7–2.5% range depending on spread.
Upside risk (rates lower): Global slowdown forces deeper Fed and MAS easing; SORA dips below 1%. Floating‑rate borrowers benefit with lower monthly instalments.
Downside risk (rates higher): Inflation re‑accelerates globally; Fed pauses or even re‑tightens; SORA climbs back towards 2–2.5%.

A prudent homeowner should ensure they can still service their loan comfortably if SORA rises by at least 1 percentage point from current levels – this aligns with the spirit of MAS’ Total Debt Servicing Ratio (TDSR) rules and banks’ internal stress‑testing.

4. 3M SORA vs 6M SORA Prediction and Impact on Your Instalments

4.1 How 3M and 6M SORA reset in practice

Here is how the two most common benchmarks work for a typical owner‑occupied HDB flat in Yishun or a mass‑market condo in Jurong East:

Feature	3M SORA Package	6M SORA Package
Reset frequency	Every 3 months	Every 6 months
Responsiveness to rate changes	Faster – tracks SORA cuts/hikes more quickly	Slower – more lagged response
Short‑term payment stability	Moderate volatility	Higher stability between resets
Typical spread range (illustrative)	~0.70–0.90%	Often slightly lower or similar, e.g. ~0.65–0.85%
Best for	Borrowers watching rates closely, comfortable with minor fluctuations	Families preferring fewer bill changes each year

In a "soft" rate environment where SORA is expected to remain low but not crash, 3M and 6M SORA are likely to be very close over 2026. The difference comes down mainly to how often you are willing to see your instalment move.