Fixed vs floating home loan Singapore
Fixed or Floating Home Loan? Choose the Structure, Not Just the Rate.
A fixed package gives you more certainty for a stated period. A floating package moves with its reference rate or pricing formula. Neither is automatically better. The right comparison depends on your cash flow, plans for the property and how comfortable you are with changing repayments.
- Fixed-rate vs floating-rate mortgages
- SORA explained in plain English
- Lock-in and repricing considerations
The basic difference
Fixed gives temporary certainty. Floating gives you a rate that can move.
That sounds simple. The decision becomes more useful when you also look at what happens after the initial period, how the rate is determined and what flexibility you have if your plans change.
Fixed-rate home loan
Know the rate for a stated period.
With a bank fixed-rate package, the applicable interest rate stays unchanged during the stated fixed period. MoneySense notes that the loan normally becomes variable after that period ends.
- More predictable repayments during the fixed period.
- You do not automatically benefit if market rates fall during that period.
- Check whether the fixed period and lock-in period are the same.
- Read what rate or pricing structure applies after the fixed period.
Floating / variable home loan
The rate changes with its reference.
A floating package can move when its reference rate or bank pricing changes. MoneySense gives SORA and bank-determined rates as examples of references used for floating housing loans.
- Your repayment can rise or fall as the applicable rate changes.
- Understand exactly what the package is pegged to.
- Check how often the rate is reviewed or reset.
- Compare the spread, lock-in and switching conditions, not only the reference rate.
| Question | Fixed-rate package | Floating-rate package |
|---|---|---|
| Does the rate move immediately with the market? | No, not during the stated fixed-rate period. | It can move according to the package's reference rate and reset terms. |
| Are repayments predictable? | More predictable during the fixed period. | Less predictable because the applicable rate can change. |
| Can you benefit when market rates fall? | Not automatically while your rate remains fixed. | Potentially, if the package reference rate falls and the change flows through under its terms. |
| What happens later? | The loan generally moves to a variable structure after the fixed period, according to the Letter of Offer. | It continues according to the floating package's pricing formula unless you reprice, refinance or otherwise change package. |
| Is there always a lock-in? | Do not assume. Check the actual package terms. | Do not assume. Floating packages can also have lock-ins or other conditions. |
Understanding SORA
What does a SORA home loan actually mean?
SORA is a market benchmark, not the final interest rate you pay. Your bank package normally combines the applicable SORA reference with the bank's stated margin or spread and other package conditions.
MoneySense defines SORA as the volume-weighted average borrowing rate in Singapore's unsecured overnight interbank cash market. SORA replaced SOR and SIBOR as a key benchmark for Singapore-dollar loans and other financial products.
Some current bank mortgage packages use compounded SORA, such as 3-month compounded SORA. That does not mean every floating mortgage uses SORA. Banks may offer other floating structures too.
The practical question is: what is your package pegged to, what margin is added, how often does it reset, and what can you do if the resulting rate no longer suits you?
Source checked 30 August 2026: MoneySense — Switching to SORA and Monetary Authority of Singapore.
How to decide
Six questions matter more than trying to predict interest rates perfectly.
Nobody can know with certainty where market rates will be throughout your mortgage. A better decision starts with what you can control.
How much repayment movement can you tolerate?
If a higher monthly instalment would create stress, the value of temporary repayment certainty may matter more to you.
How long are you likely to keep the property and loan?
If you may sell, refinance or redeem early, package flexibility and lock-in conditions deserve extra attention.
What happens after the attractive headline period?
Read the post-fixed or post-promotional pricing formula. A mortgage decision lasts longer than the first year.
Might you make a large partial repayment?
Check whether prepayment is allowed during the lock-in and whether fees, limits or notice requirements apply.
Can you switch package with the same bank later?
Repricing options differ by lender and package. Do not assume a future switch will be free or available on the same terms.
What costs or clawbacks sit around the rate?
Legal subsidies, valuation arrangements, cancellation fees and clawback conditions can affect the real economics of switching.
Do not confuse these terms
Fixed rate and lock-in period are related, but they are not the same thing.
A fixed-rate period describes how long the stated rate remains fixed. A lock-in period describes a period where certain actions may trigger charges or conditions. The exact relationship depends on the package.
This is why the Letter of Offer matters. MoneySense also points borrowers to the property loan fact sheet, which sets out key loan terms and illustrates how changes in interest rates can affect repayments.
Your next step depends on your property
Use this guide to move into the right mortgage comparison.
Fixed versus floating is only one part of the decision. Property type and whether you are buying or refinancing change what should be compared next.
Financing an HDB flat?
Compare HDB financing with bank packages, including the different cash, CPF and switching implications.
Explore HDB home loans →Buying a condo or private home?
Review bank financing, LTV, TDSR, cash requirements and the mortgage structure around your purchase.
Explore condo home loans →Already have a home loan?
Compare repricing and refinancing instead of looking at a new rate in isolation.
Review refinancing options →Ready to compare packages?
Move from rate structure to actual package conditions across relevant banks SHS works with.
Compare bank home loans →Real-world decisions
The “better” structure changes with the borrower.
These are illustrative situations, not SHS client case studies. They show why the decision should start with circumstances rather than a blanket view that fixed or floating is always better.
Predictability matters more than chasing every rate move.
A household taking on a larger private-property mortgage may place a high value on knowing the repayment during the first few years. A fixed package may therefore be worth comparing even if a floating rate is slightly lower at one point in time. The trade-off is that the fixed borrower may not immediately benefit if market rates fall.
“HDB rate vs fixed bank rate” is not a like-for-like comparison.
The HDB concessionary rate is pegged to the CPF OA interest rate plus 0.1 percentage point and reviewed quarterly. A bank fixed package works differently and later transitions according to its Letter of Offer. An HDB buyer should therefore compare the full financing route, not only two percentages.
A lower rate may not justify a new lock-in.
A homeowner expecting to sell in the near future may care more about redemption conditions and flexibility than locking into a marginally lower rate. Another homeowner planning to keep the property for years may assess the same package very differently.
Before signing
Read these parts of the home-loan package, not just the headline interest rate.
Frequently asked questions
Fixed vs floating home loan FAQs
Know which rate structure you prefer? Now compare the actual package.
A fixed-vs-floating decision is only useful when you see the complete bank terms around it. Review relevant packages for your property and financing situation before you commit.