Should I take a fixed or floating mortgage rate in Singapore?
When choosing a home loan in Singapore, one of the first decisions you will face is whether to take a fixed or floating mortgage rate.
Both can be right. The better choice depends on how much certainty you want, how long you expect to keep the loan, and how comfortable you are with interest rates moving over time.
Illustration: The Mortgage People.
What is a fixed mortgage rate?
A fixed mortgage rate gives you certainty for an agreed period. During that fixed-rate period, your monthly instalment stays the same even if market rates move.
In Singapore, fixed-rate periods are commonly around 2 to 3 years. Banks usually do not offer very long fixed periods because market conditions can change more over a longer term. Since the bank takes on the risk of rates rising, fixed rates can be slightly higher than floating rates in normal market conditions.
Some banks may offer 1-year fixed packages. These can be useful in certain situations, but they should be considered carefully because the window is short and you may need to review your loan again quite soon.
What is a floating mortgage rate?
A floating rate is linked to a reference rate that can change over time, while the bank’s spread is usually fixed and agreed upfront.
In Singapore, floating mortgage packages are often linked to the Singapore Overnight Rate Average, or SORA. This may be structured around 1-month SORA or 3-month SORA, which averages daily movements over a period for more consistency.
Some floating packages may also be linked to a bank’s fixed deposit rate or internal board rate. These move on the bank’s own timeline, so they may react more slowly to the market and may give you less visibility on future movements.
Fixed vs floating mortgage rates at a glance
| Situation | Fixed rate | Floating rate, SORA | Floating rate, board or deposit-based |
|---|---|---|---|
| Monthly instalment | Stays the same during the fixed period. | Can change every 1 to 3 months, depending on the package. | May move when the bank changes its board or deposit-based rate. |
| If the market improves | No immediate change during the fixed period. | Interest cost may fall more quickly. | Interest cost may fall more slowly, depending on the bank. |
| If the market stays flat | Certainty remains the main benefit. | Could be lower than fixed, depending on the spread. | Could be lower than fixed, depending on the bank’s rate. |
| If the market worsens | You are protected during the fixed period. | Interest cost may rise more quickly. | Interest cost may rise more slowly, depending on the bank. |
So, which mortgage rate should you choose?
It comes down to risk appetite. If you want certainty and a stable monthly instalment, a fixed mortgage rate may feel more comfortable. If you can tolerate movement and believe rates may stay low or move down, a floating rate may be worth considering.
Many homeowners benefited from floating rates when market rates were low. When inflation and global uncertainty pushed rates higher, some floating-rate borrowers faced higher interest costs over time.
The market can change quickly because of economic, political and global events. That is why the best mortgage package is not just about the lowest advertised rate. It is about your loan size, timeline, lock-in period, flexibility and comfort level.
Need help applying this to your own loan?
The right answer depends on your loan size, property type, bank profile, lock-in period and timeline. Talk to us and we will help you make sense of the options.
Speak to a specialist →Speak to a human, not an AI.
Leave your details and tell us what you need. We will follow up and help you make sense of the numbers.