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Singapore Home Loan Interest Rates 2026: SORA vs Fixed Rate — Complete Guide

Singapore Home Loan Interest Rates 2026: SORA vs Fixed Rate — Complete Guide

by | May 21, 2026 | Buying Guide, Condo Buying Guide, Laws, Regulations & Policies, Property Finance, Resources & Tools

Quick Answer — Key Takeaways

  • Singapore home loans are now primarily benchmarked to SORA (Singapore Overnight Rate Average) — the official replacement for SIBOR, which was phased out in December 2024.
  • As at May 2026, the 3-month compounded SORA is approximately 2.55%, down from its 2023 peak of above 3.7%.
  • Major banks offer two main packages: SORA-pegged floating rates (typically SORA + 0.85–0.90%) and fixed rates (typically 2.45–2.65% for a 2-year fixed term).
  • The HDB Concessionary Loan is pegged at CPF OA + 0.1%, currently 2.60%; it is available only for HDB flats and requires no lock-in period.
  • The Total Debt Servicing Ratio (TDSR) cap of 55% and Mortgage Servicing Ratio (MSR) cap of 30% remain in force and directly limit how much you can borrow.
  • Fixed rates offer payment certainty but come with a lock-in penalty (typically 1.5% of outstanding loan) if you refinance early.
  • SORA-pegged loans offer transparency and flexibility, but your repayment will move with rates — currently favourable as SORA trends down from its 2023 highs.

Understanding Singapore Home Loan Interest Rates in 2026

When you take out a home loan in Singapore, the single most consequential variable is the interest rate. On a S$1 million loan over 25 years, the difference between a 2.45% and a 3.40% rate translates to roughly S$470 more per month — or over S$140,000 in additional interest over the life of the loan. Yet many buyers in Singapore choose their home loan based on convenience, the advice of a mortgage broker with a vested interest, or simply whatever their bank’s relationship manager recommends at point of sale.

This guide explains how Singapore home loan interest rates are structured in 2026, what SORA is and why it replaced SIBOR and SOR, how to read bank package offers correctly, and how to decide between a floating rate and a fixed rate package given the current interest rate environment. It is written for Singaporean and Permanent Resident property buyers — the same principles apply to foreigners but their ABSD liability fundamentally alters the financing calculus.

Monetary Authority of Singapore (MAS) regulates home lending in Singapore under the Monetary Authority of Singapore Act and the Notice MAS 632 on Residential Property Loans. HDB administers the Concessionary Loan under the Housing and Development Act.

SORA 3M compounded vs fixed rate Singapore 2020 to 2026 chart
Figure 1: SORA 3-Month Compounded Average vs 2-year Fixed Rate — Major Singapore Banks, 2020–2026. Data: MAS, bank publications.

What Is SORA and Why Did It Replace SIBOR?

SORA — the Singapore Overnight Rate Average — is the volume-weighted average rate of all overnight unsecured Singapore dollar interbank transactions brokered in Singapore between 08:00 and 18:15 each business day. It is published daily by MAS and is calculated retrospectively, which makes it a backward-looking, transaction-based benchmark rather than a quote-based one like SIBOR was.

SIBOR (Singapore Interbank Offered Rate) was phased out on 31 December 2024 following a global reform of interest rate benchmarks prompted by the 2012 LIBOR manipulation scandal. SOR (Swap Offer Rate), which was partly based on USD LIBOR, was discontinued even earlier. MAS and the Steering Committee for SOR & SIBOR Transition to SORA (SC-STS) oversaw the transition, which required all existing SIBOR-pegged mortgages to be converted to SORA-linked packages by end-2024.

SORA is now used in three primary forms for home loans:

  • 1-Month Compounded SORA (1M SORA) — reflects the past 30 days of overnight rates. More reactive to short-term rate changes.
  • 3-Month Compounded SORA (3M SORA) — reflects the past 90 days. More commonly used by banks for home loans; provides a slightly smoother signal.
  • SORA Board Rates — some banks (notably UOB) have internal board rates that are partially informed by SORA movements but give the bank more discretion over repricing.

SORA-Pegged Floating Rate Packages

A SORA-pegged floating rate package ties your home loan to the prevailing 3M Compounded SORA, plus a fixed spread set by the bank. As at May 2026, spreads across major banks range from +0.85% to +0.90%:

  • DBS: 3M Compounded SORA + 0.85%
  • OCBC: 3M Compounded SORA + 0.88%
  • UOB: 3M Compounded SORA + 0.90%
  • Maybank: 3M Compounded SORA + 0.85%

With 3M SORA at approximately 2.55% in May 2026, an all-in floating rate works out to roughly 3.40–3.45%. This is broadly similar to the prevailing 2-year fixed rate, which sits at 2.45–2.65% for Year 1–2 before typically reverting to a board rate or SORA-linked rate from Year 3.

The key characteristics of a SORA floating package are:

  • No lock-in period — you can refinance or reprice at any time without a penalty clause.
  • Transparent repricing — your rate changes as SORA moves, typically with a 1-month lag for 1M SORA packages or a 3-month lag for 3M packages.
  • Currently in a declining environment — if MAS and the Federal Reserve continue rate normalisation through 2026, SORA is expected to drift toward 2.2–2.4% by end-2026, which would bring all-in floating rates to around 3.05–3.30%.

Singapore home loan bank package comparison table May 2026
Figure 2: Singapore Home Loan Package Comparison — DBS, OCBC, UOB, HDB Concessionary Loan and others, May 2026. Rates indicative; verify with lender.

Fixed Rate Packages

Fixed rate packages lock in an interest rate for a specified period — typically 2 years — after which the loan reverts to a floating rate, usually SORA-linked or a bank board rate. As at May 2026, major banks are offering:

Bank Year 1 Year 2 Year 3+ Lock-in
DBS 2.45% 2.55% FHR8 (board rate) 2 years
OCBC 2.50% 2.60% OHR+ (SORA-linked) 2 years
UOB 2.45% 2.55% SORA + spread 2 years
Standard Chartered 2.48% 2.60% Board rate 2 years
Maybank 2.50% 2.65% SORA + spread 2 years

The 2-year fixed period provides payment certainty — you know exactly what you will pay every month for the fixed term, which makes household budgeting straightforward. The risk is that if you need to refinance during the lock-in window — for example, because you sell the property, or a better package becomes available — you will typically pay a penalty of 1.50% of the outstanding loan amount at the time of early redemption.

On a S$1 million loan, that penalty is S$15,000. This is not an insignificant sum, and it is the primary reason experienced property investors often prefer no-lock-in floating packages despite the slightly higher all-in rate today.

The HDB Concessionary Loan — A Third Option

Buyers purchasing an HDB flat have access to a third option: the HDB Concessionary Loan, currently at a flat 2.60% per annum. This rate is set at CPF Ordinary Account interest rate (currently 2.5%) plus 0.1%, and is reviewed quarterly. It has remained at 2.60% since January 2023 when the CPF OA rate was last adjusted.

The HDB Concessionary Loan is notable for several reasons:

  • No lock-in — you can switch to a bank loan at any time without penalty.
  • LTV up to 80% — the maximum Loan-to-Value for an HDB loan is 80% of the purchase price or valuation (whichever is lower), versus 75% for a bank loan.
  • No cash down payment requirement — the 20% down payment can be funded entirely from CPF Ordinary Account (unlike bank loans, which require at least 5% in cash).
  • Eligibility conditions — all owners must not own any other residential property; income ceiling of S$14,000 household income applies for most flat types (no ceiling for HDB resale). You must obtain an HDB Flat Eligibility (HFE) Letter before exercising an OTP.

TDSR and MSR — How Much Can You Borrow?

MAS introduced the Total Debt Servicing Ratio (TDSR) framework in June 2013 to ensure borrowers do not over-leverage. TDSR limits total monthly debt obligations (including the new mortgage, car loans, personal loans, credit card minimum payments and all other credit facilities) to 55% of gross monthly income. Banks apply a stress-test rate of 4.0% per annum when assessing TDSR — meaning they calculate your hypothetical monthly payment at 4.0% regardless of the prevailing rate, to ensure you can afford the loan even if rates rise.

For HDB flat purchases (both BTO and resale), the additional Mortgage Servicing Ratio (MSR) cap applies: your monthly mortgage payment must not exceed 30% of gross monthly income. MSR applies to the actual servicing payment, not a stress-tested figure.

These rules mean that on a gross household income of S$10,000 per month, the maximum monthly mortgage payment you can qualify for (under MSR for HDB) is S$3,000; and the maximum all-debt obligation under TDSR is S$5,500. Practically, if you have a car loan of S$800/month, your maximum mortgage under TDSR is reduced to S$4,700/month.

Monthly repayment comparison by interest rate scenario S$1M loan 25 years
Figure 3: Monthly Repayment by Rate Scenario — S$1M Loan, 25-Year Tenure. Illustrative; based on standard annuity formula.

Worked Example — The Tan Family’s Loan Decision

Mr and Mrs Tan are Singapore Citizens purchasing a S$1.4 million OCR condominium in Tampines in June 2026. They are first-time buyers with no outstanding home loans. Their gross combined household income is S$14,000 per month. They have S$180,000 in CPF OA (combined) and S$100,000 in cash savings.

Loan quantum: 75% LTV on S$1.4M = S$1.05M bank loan. Down payment = S$350,000 (25%), of which at least S$70,000 (5%) must be in cash. The Tans comfortably clear this with S$70,000 cash + S$280,000 CPF.

BSD: S$24,600 on S$1.4M (first S$180k at 1%, next S$180k at 2%, next S$640k at 3%, remaining S$400k at 4% — total S$1,800 + S$3,600 + S$19,200 = wait, let me compute correctly: BSD on S$1.4M = 1%×S$180k + 2%×S$180k + 3%×S$640k + 4%×S$400k = S$1,800 + S$3,600 + S$19,200 + S$16,000 = S$40,600). ABSD: S$0 (first purchase, SC).

Rate comparison:

  • Option A — 2-year fixed at 2.45%/2.55%: Monthly in Year 1 = S$4,634; Year 2 = S$4,706. Reverts to SORA + spread from Year 3 (est. ~S$4,500–4,800 depending on SORA trajectory). Lock-in penalty if exit before 24 months: ~S$15,750 (1.5% × S$1.05M).
  • Option B — SORA float at SORA+0.85% ≈ 3.40%: Monthly = ~S$5,161. No lock-in. If SORA falls to 2.2% by end-2026, rate drops to ~3.05%, monthly ~S$4,956.
  • Option C — If they were buying an HDB resale (for illustration): HDB Concessionary Loan at 2.60% → monthly ~S$4,748 on S$1.05M, 80% LTV available.

TDSR check (Option A, Year 1): Monthly payment S$4,634. With no other debts, TDSR = S$4,634 ÷ S$14,000 = 33.1%. Well within 55%. Stress-tested at 4.0%: hypothetical monthly = S$5,534; TDSR = 39.5%. PASS.

Recommendation: Given the declining SORA environment in 2026, the Tans opt for Option A (2-year fixed) to lock in payment certainty during the early years of ownership when their cash position is most stretched. They set a calendar reminder to review and refinance in Month 20, before the lock-in expiry.

Fixed vs Floating — How to Decide in 2026

With fixed and floating rates now converging at around 3.35–3.50% all-in, the classic argument — “floating is cheaper, fixed is certain” — no longer cleanly applies. The decision framework for 2026 hinges on three questions:

  1. How long will you hold the property? If you plan to sell within 3 years (e.g., you are buying a resale flat as a stepping stone and expect to MOP a BTO), a floating package with no lock-in avoids the exit penalty. If you plan to hold for 10+ years, the 2-year fixed-then-float cycle is largely a moot point — both packages will track the same rates over the long run.
  2. How sensitive is your monthly budget to rate moves? If a S$300–500 increase in monthly repayment would significantly stress your household, a fixed rate gives you a planning buffer. If you have comfortable headroom under TDSR, floating is fine.
  3. What is the SORA outlook? As at May 2026, MAS and market consensus lean toward SORA continuing a gradual decline through 2026–2027 as the global rate cycle normalises. In a declining rate environment, locking in at today’s fixed rate means you may pay slightly more than the eventual SORA level. However, the gap is likely to be narrow (0.10–0.30%) and the certainty premium may be worth it for first-time buyers.

What Might Come Next — Singapore Loan Rate Outlook

Several factors will shape Singapore home loan rates through end-2026 and into 2027. MAS operates a unique monetary policy framework — it manages the Singapore dollar nominal effective exchange rate (S$NEER) rather than directly setting an overnight rate, meaning SORA is market-determined rather than policy-set. However, SORA is strongly correlated to the US federal funds rate through Singapore’s open capital account.

The US Federal Reserve has signalled two 25-basis-point cuts in the second half of 2026, which, if executed, would likely push 3M SORA from ~2.55% toward ~2.05–2.15% by year-end. This would bring SORA-pegged all-in rates to around 2.90–3.05% — meaningfully below today’s fixed rates of 2.45–2.65% over a 2-year view. Whether banks adjust their fixed rate offerings in anticipation remains to be seen; historically, fixed rates tend to reprice down with a 1–2 quarter lag.

Summary — Home Loan Rate Comparison at a Glance

Feature SORA Float Fixed Rate (2yr) HDB Concess.
All-in Rate (May 2026) ~3.40% 2.45–2.65% 2.60%
Rate Certainty None 2 years Stable (CPF+0.1%)
Lock-in Period None 2 years None
Exit Penalty None ~1.5% of loan None
Max LTV 75% 75% 80%
Min Cash Down 5% 5% 0% (CPF ok)
Eligible Properties All All HDB only
Best For Flexible holders; declining rate bet First-timers; budget certainty HDB buyers; tight cash

Frequently Asked Questions

What is SORA and how is it different from SIBOR?

SORA (Singapore Overnight Rate Average) is the volume-weighted average of unsecured overnight interbank SGD transactions, published daily by MAS. SIBOR was a forward-looking rate based on bank submissions — susceptible to manipulation, as the 2012 LIBOR scandal revealed globally. SORA is transaction-based and backward-looking, making it more robust and harder to manipulate. SIBOR was fully discontinued on 31 December 2024; all SIBOR-pegged mortgages were converted to SORA or fixed-rate packages during 2023–2024.

Should I choose a fixed or floating rate home loan in 2026?

With SORA declining toward 2.2% by end-2026 and fixed rates at 2.45–2.65%, the all-in rates are converging. For first-time buyers who need budgeting certainty, a 2-year fixed rate is sensible — it protects against any short-term rate surprise and costs only marginally more than today’s floating all-in rate. For investors and experienced buyers who plan to hold long-term or who may sell within 3 years, a no-lock-in SORA floating package avoids exit penalties and will benefit as SORA falls further. In 2026 specifically, the edge is modest either way; the bigger decision is the property itself.

What is the current SORA rate in 2026?

As at May 2026, the 3-month compounded SORA is approximately 2.55% per annum, down from its peak of above 3.74% in mid-2023. It has been declining steadily as the US Federal Reserve began its rate normalisation cycle in late 2024. MAS publishes daily SORA rates on its website at mas.gov.sg/monetary-policy/sora.

What is TDSR and how does it affect how much I can borrow?

The Total Debt Servicing Ratio (TDSR) limits your total monthly debt obligations (including the home loan, car loans, personal loans and other credit facilities) to 55% of your gross monthly income. Banks stress-test your loan at 4.0% per annum when assessing TDSR eligibility — so even if the prevailing rate is 3.0%, the bank calculates whether you could afford the repayment at 4.0%. On top of TDSR, if you are buying an HDB flat, the Mortgage Servicing Ratio (MSR) limits your monthly home loan repayment to 30% of gross monthly income.

Can I use CPF to pay my home loan?

Yes. CPF Ordinary Account savings can be used to service monthly home loan repayments for both HDB flats and private properties, subject to the Valuation Limit (generally the lower of the purchase price or valuation) and the Withdrawal Limit (up to 120% of the Valuation Limit for private properties). Note that CPF monies withdrawn for property earn accrued interest at 2.5% per annum, which must be returned to your CPF account upon sale. This accrued interest does not represent an additional out-of-pocket cost but reduces the net cash proceeds you receive when you sell.

What is a lock-in period and what happens if I break it?

A lock-in period is a contractual commitment to maintain your loan with the same bank for a set duration — typically 2 years for fixed rate packages. If you refinance, prepay or redeem the loan in full before the lock-in expires, you pay a penalty usually equal to 1.5% of the outstanding loan amount at the time of early redemption. On a S$900,000 outstanding balance, that is S$13,500. No-lock-in packages (all SORA floating packages and HDB Concessionary Loans) allow you to exit or refinance at any time without penalty.

What is the difference between refinancing and repricing?

Repricing is when you switch to a different loan package within the same bank — typically cheaper (no legal or valuation fees) but limited to that bank’s available packages. Refinancing is when you move your loan to a different bank entirely. Refinancing typically offers access to sharper rates but incurs legal fees (S$2,000–3,500), valuation fees (S$300–800), and potentially a clawback of cashback incentives if you refinance within the clawback period (usually 3 years). Both options are typically considered when a fixed rate lock-in expires.

Related Articles

Disclaimer

This article is for general informational purposes only and does not constitute financial or legal advice. Interest rates quoted are indicative as at May 2026 and are subject to change by individual lenders. The SORA rate is published daily by MAS and can be found at mas.gov.sg. TDSR and MSR rules are set by MAS and are subject to regulatory revision. For personalised advice on home loan selection and eligibility, consult a licensed financial adviser or mortgage specialist regulated by MAS. All stamp duty computations are based on IRAS published rates at iras.gov.sg. HDB Concessionary Loan eligibility criteria are set by HDB and available at hdb.gov.sg. CPF rules on property usage are administered by the CPF Board at cpf.gov.sg.

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Mortgage Refinancing vs Repricing Singapore 2026: When to Switch Banks and When to Stay

Mortgage Refinancing vs Repricing Singapore 2026: When to Switch Banks and When to Stay

by | May 15, 2026 | First-Time Buyer Guide, Home Loans & Mortgages, Laws, Regulations & Policies, Property Finance

Quick Answer — Refinancing vs Repricing 2026

  • Refinancing means moving your home loan to a new bank. Repricing means renegotiating your rate with your existing bank.
  • Refinancing typically saves more (0.2–0.5% p.a.) but incurs upfront costs of S$2,500–S$4,000 (legal + valuation). Repricing saves less but costs nothing or very little.
  • The break-even horizon for refinancing a S$800,000 loan is approximately 13 months — refinance only if you plan to hold the loan beyond that.
  • In Q2 2026, the 1-month SORA stands at approximately 1.20%, down from a peak of 3.68% in mid-2023. Fixed 2-year packages from major banks are available at 1.78%–1.85% p.a.
  • Never refinance within a lock-in period without checking the penalty — typically 1.5% of the outstanding loan, which can wipe out years of interest savings.
  • Banks are legally required to provide a 30-day free conversion option at the end of each lock-in period — use this as your review trigger date.
  • If your remaining tenure is less than 5 years or your outstanding balance is under S$200,000, the absolute saving from refinancing is usually not worth the administrative effort.

Every Singapore home loan has an anniversary. When the initial lock-in period ends — typically after two or three years — you face a critical decision: do you let the bank roll your mortgage onto its standard rate (often significantly higher), do you reprice it with the same bank, or do you switch to a new lender entirely?

Most homeowners do nothing, which is the most expensive choice. Singapore banks rely on inertia: the standard variable rate a homeowner reverts to after lock-in can be 0.5–0.8 percentage points higher than the rate a new customer would receive. On a S$700,000 outstanding balance, that gap costs approximately S$3,500–S$5,600 per year in additional interest.

This guide explains exactly how refinancing and repricing work in Singapore in 2026, the mathematics of when each option pays, how to read the SORA-based rate environment, and the specific situations where each choice makes sense. Pair it with our Singapore Home Loan Comparison guide for the full picture on choosing between HDB loans, fixed rates, and floating packages.

1. The Core Distinction: Refinancing vs Repricing

Refinancing is the process of discharging your existing home loan and taking out a new loan from a different bank. Legally, the new bank pays off your old loan and registers a new mortgage over your property. You go through a full credit assessment, a new loan agreement, legal completion and (usually) a new valuation. The entire process takes 4–8 weeks from application to disbursement.

Repricing is an internal renegotiation with your existing bank. You ask the bank to move your loan from its current rate to a newer, lower package. No change of lender takes place; no new legal process is required; and no new credit check is typically conducted. The bank simply updates your loan terms. Repricing can be completed in 2–4 weeks and usually costs nothing or carries a small administrative fee of S$500–S$800.

Refinancing vs repricing comparison table Singapore 2026 — 10 key dimensions for homeowners
Figure 1: Refinancing vs repricing across 10 dimensions — a complete side-by-side comparison for Singapore homeowners in 2026.

2. When Does Refinancing Make Sense?

Refinancing is financially beneficial when the interest rate saving is large enough to recover the upfront switching costs within your planned holding period. The key variables are:

  • Outstanding loan balance: The larger the balance, the larger the absolute saving per percentage point of rate reduction. A 0.4% saving on S$800,000 is S$3,200/year; the same saving on S$200,000 is only S$800/year.
  • Rate differential: The gap between your current rate and the best available package. In Q2 2026, homeowners on standard variable rates of 2.2–2.5% p.a. can often find fixed 2-year packages at 1.78–1.85%, creating a saving of 0.3–0.7 percentage points.
  • Remaining tenure: With 20+ years remaining, even moderate rate savings compound significantly. With 3–5 years left, the absolute saving window is much smaller.
  • Lock-in status: You must be outside the lock-in period. If you refinance within lock-in, the clawback penalty (typically 1.5% of outstanding loan) will likely exceed any rate saving.

As a general rule: refinancing makes sense when the outstanding balance exceeds S$400,000, the rate saving exceeds 0.3% p.a., and you are outside your lock-in period.

3. The Break-Even Mathematics

Break-even analysis mortgage refinancing Singapore 2026 — S$800,000 loan worked example
Figure 2: Break-even calculation for refinancing an S$800,000 outstanding loan from 2.20% to 1.80% p.a. — the switching costs are recovered in approximately 13 months.

The break-even formula is straightforward:

Break-even months = Total switching costs ÷ Monthly interest saving

For the example in Figure 2: a S$800,000 outstanding balance at 2.20% costs approximately S$1,467/month in interest. At 1.80%, this falls to S$1,200/month — a saving of S$267/month. With total switching costs of S$3,500, break-even occurs at month 13.1. Over a 2-year new lock-in, the net saving is S$267 × 24 − S$3,500 = S$2,908.

Critically, this is a simplified calculation on interest only. In practice, you should also factor in: any cash-back offer from the new bank (which reduces effective switching cost); whether the new bank’s rate holds for the full 2 years or is a promotional teaser; and the difference in processing timescales that creates a month or two of overlap where both the old and new rates apply.

4. The 2026 Rate Environment: SORA Has Fallen Significantly

SORA rate history 2022 to 2026 and Singapore bank mortgage rates Q2 2026 comparison
Figure 3: Singapore’s 1-month SORA peaked at 3.68% in July 2023 and has since fallen to approximately 1.20% in May 2026. Q2 2026 bank fixed packages are now at 1.78–1.85% p.a.

The SORA (Singapore Overnight Rate Average) is the benchmark underpinning most floating-rate home loans in Singapore, replacing SIBOR in 2024. After peaking at 3.68% in July 2023, 1-month SORA has fallen steadily as the US Federal Reserve began its easing cycle in late 2024. By May 2026, 1-month SORA stands at approximately 1.20%.

This rate decline has transformed the refinancing calculus. Homeowners who locked into 3-year fixed rates at 3.0–3.5% in 2023 are now significantly out-of-money relative to the market. Their lock-in periods of 2–3 years mean they are emerging (or will emerge in 2025–2026) into a market where 2-year fixed packages are available at 1.78–1.85%. The saving potential is substantial.

Conversely, homeowners on SORA-based floating packages taken in 2024–2025 at spreads of +0.8–1.0% above SORA are currently paying approximately 2.0–2.2% p.a. — and the rate will decline further as SORA continues to fall. These homeowners may find that staying floating is better than locking into a fixed rate, as the fixed rate today may prove higher than the floating rate in 12–18 months.

5. How to Negotiate Repricing

Repricing is underused by Singapore homeowners who assume the bank will not move. In practice, banks negotiate repricing regularly — particularly for borrowers with good payment records and large loan balances. The process:

  1. Check your lock-in expiry date. Most loan packages have a letter from your bank confirming the lock-in end date. If you cannot find it, call the mortgage servicing hotline.
  2. Review the bank’s current new-customer packages. Banks publish their mortgage rate sheets online (DBS, OCBC, UOB all have rate pages). Identify the best package a new customer would receive.
  3. Submit a repricing request. Call the mortgage servicing team (not the branch) and request a repricing. Mention that you are comparing competitor packages. Banks have a dedicated repricing/retention team.
  4. Request the “Board Rate” alternative. If the bank will not match a competitor’s promotional rate, ask whether a lower spread-over-SORA package is available.
  5. Compare the offer vs. refinancing. If the bank offers a rate within 0.1–0.15% of a competitor, the S$3,500 switching cost makes refinancing uneconomical for most loan sizes.

Banks are also required under MAS guidelines to proactively offer refinancing information to borrowers nearing the end of their lock-in periods. This obligation has been reinforced as part of the MAS guidelines on responsible mortgage lending.

6. Worked Example: Mr and Mrs Wong

Mr and Mrs Wong (both Singapore Citizens) purchased a S$1.35 million OCR condo in 2023, financing S$1,012,500 (75% LTV) with a DBS 2-year fixed rate at 3.10% p.a. Their lock-in period ends in August 2026. Outstanding balance at that point: approximately S$968,000 (after 36 months of instalments at ~S$4,980/month).

Option A — Reprice with DBS: DBS offers to move them to their current 2-year fixed package at 1.80% p.a. New monthly instalment: approximately S$4,480 — a saving of S$500/month. No fees. Total 2-year saving: S$500 × 24 = S$12,000.

Option B — Refinance to OCBC: OCBC offers 1.75% fixed 2 years with a S$2,000 cash-back incentive. Legal + valuation fees: S$3,200. New monthly instalment: ~S$4,450 — S$530/month saving vs current rate. Over 24 months: S$530 × 24 + S$2,000 cash-back − S$3,200 costs = S$11,520 net saving.

Decision: Option A (repricing) saves S$480 more over 2 years with far less administration. The Wongs should accept DBS’s repricing offer. Had DBS offered 1.90% instead of 1.80%, Option B would pull ahead — so it always pays to get the repricing offer in writing before deciding.

7. CPF Implications

When you refinance (switch banks), the new bank uses CPF to service the new loan in the same way as the old one. There is no interruption in CPF usage. However, if you have been using CPF Ordinary Account for loan repayments, the CPF accrued interest on the CPF principal withdrawn continues to accumulate throughout — refinancing does not reset or reduce this accrued interest obligation. Ensure you understand how the accrued interest will be settled when you eventually sell the property.

8. What Might Come Next

The trajectory of SORA — which follows US Fed rates with a lag — is the key variable. As at May 2026, the market broadly expects one or two further Fed cuts in 2026, which would push 1-month SORA below 1.0% by end-2026. If this materialises, homeowners currently on SORA-based floating packages will see their rates fall further without any action required. Fixed rates, by contrast, are priced partly on the forward rate curve and already factor in some further SORA easing — locking in a 2-year fixed now is effectively a bet that SORA will not fall significantly below 0.8–1.0% over the next 24 months.

MAS has also indicated continued focus on responsible lending standards. Any homeowner refinancing must satisfy the TDSR 55% cap under the new lender’s assessment, even if they have been meeting repayments comfortably for years. If income has changed since the original loan was taken, this is an important consideration.

Summary Table: When to Refinance vs Reprice

Situation Recommended Action Why
Outstanding balance > S$500k, outside lock-in, rate gap > 0.3% Refinance Break-even < 12 months; net saving substantial over 2 years
Outstanding balance S$200k–S$500k, rate gap 0.2–0.3% Reprice first, then compare Repricing may close the gap; only refinance if bank won’t budge
Within lock-in period Wait or reprice only Clawback penalty (1.5%) likely exceeds rate saving
Remaining tenure < 5 years Reprice or do nothing Short window limits absolute savings from refinancing
Outstanding balance < S$200k Reprice only Absolute saving too small to justify S$3,000–S$4,000 switching cost
Currently on floating SORA, SORA falling Stay floating; review at 6-month intervals Falling SORA reduces your rate automatically without any action

FAQ: Mortgage Refinancing and Repricing Singapore 2026

What is the difference between refinancing and repricing?

Refinancing involves switching your home loan from your current bank to a new lender. The new bank pays off your existing loan and a new mortgage is registered. You incur legal fees, valuation fees, and go through a fresh credit assessment. Repricing means renegotiating your rate with your existing bank without changing lenders — no legal process, typically no fees, and faster completion (2–4 weeks vs 4–8 weeks). Refinancing typically offers a larger rate saving; repricing is simpler and cheaper to execute.

When is the right time to refinance my home loan?

The ideal time to refinance is in the 3-month window before your current lock-in period expires. By starting the process 90 days before expiry, you can complete the new loan application, approval, and legal completion just as your lock-in ends, avoiding any overlap or clawback penalties. Refinancing within the lock-in period triggers a clawback penalty (typically 1.5% of outstanding loan), which in most cases wipes out the rate saving entirely.

What are the typical costs of refinancing in Singapore?

The main costs are legal fees (S$1,800–S$2,500) and valuation fees (S$500–S$800), totalling S$2,500–S$3,500 for a standard condominium. Some banks offer a “legal subsidy” or cash-back offer of S$1,500–S$3,000 to offset these costs, effectively reducing or eliminating the net upfront expense. You should always ask the new bank whether a legal subsidy is available and factor it into your break-even calculation.

Does refinancing affect my CPF usage?

No — refinancing does not interrupt or change your CPF usage for the home loan. The new bank will receive CPF contributions in exactly the same way as the old bank, and the CPF Board processes this automatically. However, the CPF accrued interest on any CPF principal already used continues to accumulate throughout the life of the loan. Switching banks does not reduce or reset the accrued interest obligation that will be due when you sell the property.

Will refinancing affect my TDSR or LTV?

Yes — refinancing requires a full new credit assessment by the new bank, including a recalculation of your TDSR (Total Debt Servicing Ratio). If your income has changed significantly since the original loan was taken (e.g., you switched to self-employment, took a pay cut, or took on additional debt), you may find that the new bank’s TDSR calculation limits the loan amount they can offer. The LTV ceiling for refinancing an existing loan is generally 75% for private properties (bank loan), unchanged from a purchase. If property values have fallen since purchase, a new valuation may show a lower property value, potentially affecting the LTV-based loan amount.

Is a floating or fixed rate better in 2026?

In May 2026, with 1-month SORA at approximately 1.20% and market expectations pointing to further easing, floating SORA-based packages (SORA + spread of 0.8–1.0%) result in effective rates of approximately 2.0–2.2% p.a. Fixed 2-year packages are available at 1.78–1.85%. The fixed rates currently appear cheaper than floating, but if SORA falls below 0.8% in the next 12–18 months, the floating rate will dip below the fixed rate. The decision depends on your view on further SORA movements and your appetite for rate certainty. For most owner-occupiers prioritising budgeting certainty, a 2-year fixed package currently makes sense.

Can I refinance an HDB loan to a bank loan?

Yes. You can switch from an HDB concessionary loan (2.60% p.a.) to a bank loan, and many homeowners have done so when bank rates fell below HDB’s rate. The process involves applying to the bank, obtaining HDB’s agreement, and completing the documentation for the discharge of the HDB loan. One important restriction: once you switch from an HDB loan to a bank loan, you cannot switch back to an HDB loan. This is irreversible. Given that HDB’s 2.60% rate (pegged at 0.1% above CPF OA rate) is a stable floor and bank rates can rise above it, ensure you are comfortable with a bank loan for the life of the mortgage before making this switch.

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Disclaimer

This article is for general informational and educational purposes only. It does not constitute financial, legal, or mortgage advice. Interest rates, bank packages, and SORA values referenced reflect information available as at May 2026 and are subject to change. Always obtain a current rate sheet from your bank or mortgage broker before making any refinancing or repricing decision. Consult a licensed mortgage broker, MAS-regulated financial adviser, or solicitor for advice specific to your circumstances. For authoritative guidance on TDSR and MAS mortgage regulations, refer to mas.gov.sg. For CPF-related queries, refer to cpf.gov.sg.

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