Mortgage rates in Singapore have dropped to their lowest point in three years and homeowners are starting to feel some relief. Fixed-rate housing loans today cost about half of what borrowers were paying in January. The important question now is whether rates will continue to fall in 2026 or if they have reached their lowest point.
Why Singapore Mortgage Rates Dropped So Sharply
Singapore banks do not operate independently when setting home loan rates. Local mortgage pricing closely follows monetary signals from the US Federal Reserve. In December, the Fed delivered its third interest rate cut of the year, strengthening market expectations that borrowing costs would continue to ease. At the start of 2025, fixed-rate home loans were hovering around 3.1%. Today, banks are offering fixed-rate packages between 1.4% and 1.8%, depending on loan size, tenure, and borrower profile. This marks one of the sharpest and fastest declines in Singapore mortgage rates in recent years.
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Singapore Home Loan Rates Hit Three-Year Lows
Mortgage rates in Singapore are now at their lowest levels in roughly three years. This decline has created renewed interest among homeowners and buyers alike. The combination of global rate cuts, strong liquidity conditions, and heightened competition among banks has pushed pricing lower than many expected. While fixed-rate packages are drawing the most attention, overall home financing costs across the market have clearly reset to a much cheaper level compared to early 2024.
| Loan Category | Start of 2025 | December 2025 | Key Impact |
|---|---|---|---|
| Fixed Interest Home Loans | Approx. 3.1% | 1.4% – 1.8% | Borrowing cost reduced by nearly 50% |
| 3-Month SORA Rate | Around 3.0% | About 1.2% | Lowest level recorded since December 2022 |
| Bank Lending Margin | Roughly 0.7% | Close to 0.25% | Strong competition among banks |
| HDB Concessionary Loan | 2.6% | 2.6% (No change) | Now costlier than most bank loans |
Floating Rates Have Fallen Rapidly Too
The decline is not limited to fixed-rate loans. Floating-rate mortgage packages, commonly pegged to the three-month SORA, have also dropped sharply. SORA fell from around 3% in January to approximately 1.2% by mid-December, marking the lowest level since December 2025 . At the same time, banks have narrowed their margins significantly. The typical spread added to SORA has shrunk from about 0.7% to as low as 0.25%, reflecting unusually intense competition in the market.
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Will Mortgage Rates Continue Falling in 2026?
The short answer is yes, but expectations should remain realistic. Analysts at DBS note that local rates began easing even before the Fed’s cuts, supported by strong domestic liquidity and safe-haven capital inflows earlier in the year. Looking ahead, the Federal Reserve’s latest projections suggest only one modest 0.25% cut in 2026. Fed chair Jerome Powell has also ruled out aggressive easing for now. Most mortgage experts believe SORA has likely reached its floor unless a major global shock, such as a severe recession or labour market collapse, occurs.
Banks Are Still Competing Aggressively for Borrowers
Even if headline interest rates stabilise, banks are not easing their efforts to attract customers. Homeowners can still expect incentives such as legal fee subsidies, cash rebates, and zero-penalty early repayment offers. Competition is typically most intense in the first quarter of the year, when banks push hard to grow market share. For homeowners coming out of lock-in periods, this competitive environment can translate into substantial savings.
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Refinancing vs Repricing: Real Savings Are Happening
Many Singapore homeowners are actively switching mortgage packages to reduce monthly repayments. One homeowner who recently repriced moved to a two-year fixed loan at 1.6%, down from 3% previously, saving roughly S$500 per month. That adds up to about S$6,000 in annual savings simply by changing loan terms. Refinancing involves switching banks and typically incurs legal and valuation fees, while repricing means changing packages with the same bank at lower administrative costs. Both options can be effective depending on individual circumstances.
Why More HDB Owners Are Switching to Bank Loans
This has become a major trend in 2025. The HDB concessionary loan rate remains fixed at 2.6%, while bank mortgage rates have dropped well below that level. As a result, OCBC reported seven times more HDB owners switching to bank loans this year, while DBS saw a thirteen-fold increase in take-up for its POSB HDB loan packages. For a S$500,000 loan, annual interest savings can reach up to S$4,100. However, once homeowners move from an HDB loan to a bank loan, they cannot switch back, and bank loans carry greater rate volatility.
Should Homeowners Act Now or Wait?
For most Singapore homeowners, current mortgage rates already reflect most of the expected monetary easing. Waiting for another significant drop may not deliver meaningful additional savings, especially if a lock-in period is ending soon. The biggest advantages right now come from locking in low fixed rates, negotiating rebates, and choosing loan structures that offer flexibility if rates rise again in the future. Another tightening cycle will eventually come, as interest rate cycles are inevitable.
