Buying a home is one of the biggest financial decisions you’ll ever make and for most buyers, it begins with choosing the right home loan. With the property market evolving and Singapore mortgage rates seeing constant shifts, understanding how these loans work is crucial. Whether you’re purchasing your first apartment or refinancing an existing property, knowing the fundamentals of interest rates and home loans in Singapore can make all the difference.
Understanding How Singapore Home Loan Rates Work
To make sense of mortgage rates in Singapore, you need to understand what drives them. These rates are influenced by global interest rate trends, inflation, and local monetary policies. When banks determine your home loan interest rate in Singapore, they typically use financial benchmarks like the Singapore Overnight Rate Average (SORA), the Fixed Deposit Home Rate (FHR), or an internal board rate.
Your actual loan rate is usually made up of this benchmark plus a “spread,” which reflects the bank’s margin. Even a small difference say 0.2% can lead to thousands of dollars in savings or additional costs over the life of your mortgage. This is why comparing Singapore home loan rates across banks is vital before committing.
Fixed vs Floating Interest Rates
Once you start exploring options for mortgage in Singapore, you’ll encounter two main types of interest rates: fixed home loan rates and floating home loan rates. Both serve different financial goals, so your choice will depend on your comfort with risk and your repayment plans.
1. Fixed Interest Rates
A fixed interest rate home loan offers stability. Your monthly instalments remain constant during the agreed lock-in period, making budgeting simple and predictable. For instance, if you secure a two-year fixed rate at 1.60%, you’ll pay the same amount each month regardless of market fluctuations. This option suits those who prefer consistency or who expect rates to rise.
However, fixed-rate packages tend to start slightly higher than floating ones. Once the lock-in period ends, the rate often reverts to a market-linked benchmark, meaning it can move up or down depending on economic conditions. At that stage, many homeowners choose to refinance if better offers are available.
2. Floating Interest Rates
Meanwhile, packages for floating mortgage in Singapore are pegged to benchmarks like SORA or FHR, meaning they move with the market. If the economy stabilises or borrowing costs drop, your interest rate and monthly payments could decrease, saving you money. Conversely, when market rates rise, your payments go up too.
Some banks revise floating rates every month (1M SORA), while others adjust them quarterly (3M SORA). The three-month version tends to be less volatile, appealing to borrowers who want a balance between flexibility and stability. Floating rates generally start lower than fixed rates but they come with greater uncertainty, making them ideal for those comfortable with short-term fluctuations.
The Importance Of Lock-In Period
When selecting a home loan in Singapore, always check the lock-in period, typically between two and five years during which your rate and loan conditions remain fixed. This period protects the bank’s interest, ensuring that borrowers don’t switch lenders too quickly after securing an attractive rate.
If you make an early repayment or refinance during this time, you’ll usually incur a prepayment penalty of 1.5% of your outstanding loan. For example, on a $300,000 loan, this could mean paying about $4,500 in penalties.
Choosing the right lock-in period depends on your long-term plans. If you expect to sell or refinance your property soon, go for a shorter lock-in period or a package without one. However, if you plan to stay put for several years, a longer lock-in period can offer more stability.
Home Loan Rates In 2025
The year 2025 has brought a stabilisation in Singapore mortgage rates, following the rapid increases seen between 2022 and 2024. On average, fixed home loan packages currently range between 1.5% and 2.8%, depending on the lender and the duration of the lock-in period.
For example, Maybank continues to offer one of the most competitive fixed-rate loans, starting around 1.60% for a two-year lock-in period. OCBC also remains a popular choice, with options that let borrowers choose between two-, three-, or even four-year lock-ins at rates around 1.8%. Longer lock-in periods generally come with slightly higher rates, but they offer peace of mind against future market volatility.
In contrast, floating home loan rates in Singapore start slightly lower, often between 1.6% and 2.2%. OCBC’s 3-month SORA package, for instance, remains attractive because of its relatively low initial rate and quarterly adjustments. Meanwhile, Maybank’s SORA-linked loan with a shorter one-year lock-in period appeals to homeowners who plan to refinance soon.
In short, borrowers who value certainty are leaning towards fixed home loan rates, while those who want flexibility and the chance to capitalise on market dips continue to favour floating home loan rates.
Home Loan Rates For Buildings Under Construction (BUC)
If you’re buying a property that’s still under construction, home loan rates for buildings under construction (or BUC loans) deserve special consideration. These loans are released progressively as the development is built, meaning you don’t start paying the full instalment right away.
Most BUC buyers prefer loans without a lock-in period, as this gives them the freedom to refinance once the building is completed. In 2025, BUC loan packages in Singapore typically start between 0.9% and 1.2%, with banks like Standard Chartered and Citibank offering competitive SORA-linked options. For instance, Standard Chartered’s SORA package offers one of the lowest rates at about 0.98% with no lock-in period, making it a top choice for buyers who want flexibility during the construction phase.
Choosing a no-lock-in BUC loan also ensures you can switch to a fixed-rate package later if market conditions change, securing a lower home loan interest rate in Singapore once your home is ready for occupancy.
Will Home Loan Interest Rates in Singapore Rise Further?
Forecasting future home loan interest rate in Singapore is never easy, but analysts expect rates to remain stable through most of 2025. After several years of volatility, the market is entering a consolidation phase where rate changes will likely be gradual rather than extreme.
Since mortgage rates in Singapore often move in line with US interest rate policies, much depends on how inflation behaves globally. If inflation continues to ease, modest rate reductions could appear by late 2025. Still, financial experts suggest locking in competitive rates sooner rather than later, as predicting long-term movements remains uncertain.
Ultimately, the best strategy is to choose a home loan package that fits your personal financial goals rather than trying to time the market.
Tips For Getting The Best Home Loan in Singapore (2025)
Here are some simple but powerful steps to secure the best deal on your home loan in Singapore this year:
- Compare multiple lenders, as even small rate differences can save thousands over your loan term.
- Look beyond the interest rate and check for fees, penalties, and refinancing clauses.
- Stay informed about benchmarks like SORA and FHR to anticipate rate changes.
- Work with a mortgage consultant who understands your goals and risk profile.
- Plan conservatively and always ensure you can handle payments if rates rise by 1–2%.
Final Thoughts
Whether you choose a fixed interest rate home loan for security or a floating mortgage in Singapore for flexibility, the key to making a smart decision lies in understanding how rates work and anticipating your future needs. With Singapore home loan rates in 2025 remaining competitive but slightly elevated, it’s a good time to review your finances and lock in a rate that aligns with your long-term plans.
Remember, the best loan isn’t always the one with the lowest interest rate. It’s the one that gives you confidence, control, and flexibility as your life and finances evolve.
Author’s Bio:
Paul Grewal is a seasoned home mortgage consultant based in Singapore, known for his strategic approach and deep understanding of the property financing landscape. With over a decade of experience, he specialises in guiding clients through mortgage loan options, securing competitive home loan rates in Singapore, and advising on optimal interest rate structures. Paul’s expertise extends to analysing mortgage interest rates in Singapore and helping homeowners choose between fixed-rate and market-linked plans. He regularly contributes to property and finance publications, offering insights on mortgage rates in Singapore, property investment, and smart refinancing strategies. This post explores the trends shaping Singapore home loan rates in 2025, explaining the differences between fixed and floating mortgage options in Singapore, the importance of lock-in periods, and what borrowers can expect in the coming year.
