Although mortgage rates have taken a welcome dive from their peaks at the start of the year, the majority of Singaporean homeowners are still clinging to the security of fixed loan packages.
Fixed packages have virtually halved, dropping from a steeper 3.1% in early 2025 to a much more palatable range of 1.4% to 1.8% by late 2025. Currently, resale condo owners can snag rates around 1.48% for the first two years, while HDB owners enjoy promotional rates near 1.45% involving EMI schemes, figures that are markedly more attractive than the standard HDB concessionary rate of 2.6%. Despite floating rates starting even lower, specifically at 1.15% for private properties through lenders like Standard Chartered, risk-aversion remains the flavor of the season.
Fixed packages virtually halved to palatable lows, though risk-aversion remains the flavor of the season.
The Singapore Overnight Rate Average (SORA), which dictates floating packages, tumbled from 3% in January to 1.2% by mid-December, heavily influenced by the US Federal Reserve’s third rate cut on December 10. While floating rates adjusted quickly to this decline, fixed rates moved more gradually. SORA has recently remained range-bound between 1.1% and 1.2%, presenting a tempting opportunity for those willing to bet on further easing.
However, for many, the transparency of fully adopted SORA benchmarks isn’t enough to outweigh the unpredictability associated with market fluctuations.
Homeowners face a classic dilemma: pay a premium for peace of mind or risk volatility for savings. Fixed loans, which lock in rates for typically one to five years, offer payment certainty, a massive draw for budgeting families who wish to avoid rude shocks. Singapore’s market stability continues to attract real estate investors who prioritize long-term security over short-term gains. Indicative of this strong preference for stability, 80% of customers opted for fixed packages throughout 2025.
In contrast, floating loans, often pegged to the 3-month SORA plus a bank spread, fluctuate along with actual interbank costs. Though floating options are cheaper right now, potentially saving roughly $4,100 annually on a $500,000 loan over five years, the memory of volatility lingers.
Consequently, bank switches are surging, with institutions like OCBC reporting a seven-fold increase in HDB owners refinancing to bank loans to escape the higher 2.6% rate. To further entice borrowers to optimize their existing mortgage terms, lenders are now offering incentives such as cash rewards of up to $3,300 and removing upfront fees.
Ultimately, while floating rates are steadily gaining traction among the financially adventurous, the steadfast security of fixed rates still continues to dominate the market.
