Although Singapore’s interest rate environment has shifted markedly since early 2025, fixed-rate home loans continue to dominate new mortgage origination, reflecting a clear borrower preference for rate certainty amid evolving market conditions. Fixed packages priced at 3.1% in early 2025 have compressed sharply to about 1.4–1.8% by late 2025, with some banks posting headline offers as low as 1.30% in the week of 19 January 2026, a level that materially undercuts the Housing & Development Board’s long-standing 2.6% concessionary rate. This rate repricing has occurred even as analysts caution that SORA may have already “found a floor”, implying limited scope for further meaningful downside in benchmark floating rates. Borrowers’ desire for stability and predictable costs continues to outweigh the renewed appeal of floating options as rates ease.
Fixed-rate mortgages dominate as borrowers chase rate certainty and bank offers undercut HDB’s 2.6% concessionary rate
This rate differential translates into tangible cost efficiencies, with a S$500,000 loan refinanced from HDB to bank fixed rates generating savings of roughly S$4,100 per annum, even before accounting for ancillary incentives.
Against this backdrop, fixed-rate mortgages have captured the bulk of new demand: OCBC reports that four in five mortgage customers selected fixed packages through 2025, while DBS notes strong take-up of fixed loans among new homeowners, despite renewed interest in floating benchmarks as SORA declined from about 3% in January to 1.2% by December 2025.
Borrowers are prioritising predictable monthly instalments after recent rate volatility, and appear willing to trade marginally lower projected floating costs for contractual certainty, particularly through one- and three-year fixed structures.
Current year-one fixed offers at 1.78%, 1.60%, 1.50% and 1.35%, alongside three-year fixed rates at 1.78% and 1.50%, indicate aggressive competition, with banks layering legal subsidies, cash rebates of S$2,500–S$2,800 for larger loans, and in some cases waivers of early repayment penalties on sale.
Market participants widely expect only marginal further easing in 2026, with all-in floating rates projected around 1.2–1.3%, suggesting that SORA may be near its floor and limiting the perceived upside of pure floating exposure.
Instead, borrowers are gravitating to fixed packages with two- to five-year lock-ins, yet retaining optionality through features such as penalty-free partial repayments, free conversions to floating (including FC24 and FC36 structures), and minimum quantum thresholds between S$400,000 and S$2 million.
These dynamics are particularly evident in the HDB refinancing segment, where OCBC’s volume of switchers from HDB loans expanded sevenfold in 11 months of 2025, and DBS POSB’s HDB loan take-up rose 13 times between October and November, consolidating the primacy of fixed-rate bank mortgages within overall housing loan portfolios that already comprise 19–24% of total lending at the major banks.
