SORA vs Fixed Rate Refinancing: Which is Better?
For Singapore homeowners eyeing refinancing in late 2025, SORA-based loans often edge out fixed-rate options due to lower all-in rates around 1.6-2.0% versus fixed rates of 1.65-1.75%, but fixed rates win for those prioritizing stability amid volatility risks[1][2].
Homejourney, your trusted platform for safe property decisions, helps you compare these options transparently. This cluster article dives into the tactical choice between SORA and fixed rate refinancing, linking back to our pillar guide on Is Refinancing Worth It? for full coverage.
Understanding SORA vs Fixed Rate Refinancing
SORA (Singapore Overnight Rate Average) is a floating benchmark based on actual bank transactions, published daily by ABS, making it transparent and market-driven[1][3]. Fixed rate refinancing locks in a rate for 2-3 years, often from banks like DBS, OCBC, or UOB.
In refinancing, you switch your existing loan to a new package. SORA refinancing suits those expecting rates to stay low (3-month SORA at ~1.34% as of Oct 2025[9]), while fixed offers payment certainty. OCBC notes fixed rates remain popular, with 4 in 5 customers choosing them despite SORA demand rising[4].
Refinancing worth it? Yes, if savings exceed costs—use Homejourney's refinance calculator to check.
Key Differences: SORA vs Fixed Rates in 2025
SORA loans (1-month or 3-month + 0.30-0.50% spread) yield all-in rates of 1.6-2.0%, cheaper than fixed at 1.65% (large loans) to 1.75% (smaller ones)[1]. Fixed provides stability but with 2-3 year lock-ins and penalties of 1.5-2% if broken early.
- SORA Pros: Lower costs now, flexible repricing, benefits from rate drops (SORA dipped below 1% in Sept 2025[1]).
- SORA Cons: Monthly fluctuations (±S$200-400), budgeting uncertainty[2].
- Fixed Pros: Predictable payments, ideal for tight budgets or HDB owners[1].
- Fixed Cons: Misses further drops, reverts to higher board rates post-lock-in[2].
For a S$500k loan over 25 years, SORA at 3.9% saves S$48,700 in interest vs 4.25% fixed, with S$169 lower monthly payments[2]. Rates updated for Dec 2025 trends show SORA stable at 3.2-3.5% forecast[2].
Refinancing Costs and Break-Even Analysis
Refinancing costs include legal fees (S$1,500-2,500), valuation (S$500-1,000), and clawback (up to 1.5% if recent incentives)[2]. Total: S$3,000-5,000 for HDB, higher for private.
Calculate refinance break-even: (Monthly savings × 12) ÷ Total costs = months to recover. Example: S$200 monthly savings, S$4,000 costs = 20 months break-even. If holding longer, it's profitable.
| Loan Size | SORA All-In Rate | Fixed Rate | Monthly Savings (SORA) |
|---|---|---|---|
| >S$2M | 1.6% | 1.65% | S$50-100 |
| S$1M | 1.6-1.7% | 1.70% | S$100-150 |
| S$500k-1M | 1.8-2.0% | 1.75% | S$50-100 |
Source: Adapted from 2025 data[1]. Detail costs in our Refinancing Costs Breakdown.
When Should You Refinance? Timing and Scenarios
Best now with SORA at 3-year lows[4][9]. Check lock-in expiry—avoid penalties. For HDB upgraders in areas like Punggol, SORA maximizes cashflow; fixed suits families in mature estates like Bedok.
Should I refinance? Yes if >20 months horizon and 0.3%+ rate drop. Time via Homejourney's real-time SORA tracker on our bank rates page.
Read Best Time to Refinance HDB & Private Properties in 2025 for more.
Step-by-Step Guide to Refinancing on Homejourney
- Compare rates: Visit Homejourney bank rates for DBS, OCBC, UOB, HSBC—see all in one place.
- Check eligibility: Use MyInfo with Singpass for instant pre-approval.
- Calculate savings: Our refinance calculator factors costs, break-even.
- Submit multi-bank app: One form gets offers from 10+ banks like Maybank, CIMB.
- Get expert help: WhatsApp our team for HDB-specific advice (e.g., ABSD implications).
- Sign & save: Process takes 2-4 weeks; track via dashboard.
Homejourney verifies all data for your safety, prioritizing trust.
Money-Saving Tips: Negotiate and Maximize Rebates
Negotiate 0.05-0.10% off spreads with volume from Homejourney's multi-bank system. Hunt cash rebates (up to S$2,000+). Combine with property search on Homejourney search or maintenance via aircon services.
Insider tip: HDB owners in Yishun—refinance post-BTO Year 5 for no clawback, locking SORA lows before potential rises.
FAQ: SORA vs Fixed Rate Refinancing
Q: SORA vs Fixed Rate Refinancing: Which is Better?
A: SORA for cost savings and flexibility if you have a buffer; fixed for stability. Depends on your risk tolerance and loan size[1][2].
Q: Is refinancing worth it now?
A: Yes, with SORA at lows—savings of S$150-200/month possible if break-even < holding period. Use our calculator[2].
Q: What are typical refinancing costs?
A: S$3k-5k total. See breakdown here.
Q: How to calculate refinance break-even?
A: (Annual savings) / Costs = years to break even. E.g., S$2,400 savings / S$4,000 = 1.67 years.
Q: Which banks offer best SORA refinancing?
A: Compare DBS, OCBC, UOB on Homejourney—submit once for all.
Disclaimer: This is educational; consult professionals. Rates as of late 2025[1][2][9]. Homejourney ensures verified info for confident decisions.
Ready to compare? Start on Homejourney bank rates today. Explore our pillar guide for deeper insights.
