Will Mortgage Rates Fall Further in Singapore 2026? (Forecast)

As we move through 2026, the conversation around mortgage rates in Singapore has shifted meaningfully. The debate is no longer about when rates will start falling – that phase has already passed. Instead, homeowners and buyers are asking a more nuanced question: How much of the decline has already happened, and what should I do now?

After the rapid tightening cycle of 2022 and 2023 pushed borrowing costs sharply higher, 2025 delivered a dramatic reset. By the end of 2025, fixed housing loan packages that were around 3.1% at the start of the year had fallen to roughly 1.4%–1.8%. At the same time, the three-month compounded SORA declined from about 3% in early 2025 to around 1.2% by mid-December, and stood near 1.18% as of 9 January 2026.

In short, the heavy lifting in the rate cycle has already occurred. The more useful question in 2026 is not “Will rates fall?” but “Have rates found a floor – and how should I structure my loan in this environment?”

Why Were Mortgage Rates So High in 2022–2023?

To understand today’s lower mortgage rates in Singapore, you first have to understand why they rose so aggressively.

1. The global tightening cycle

Beginning in March 2022, the US Federal Reserve (Fed) embarked on one of the most aggressive rate-hiking cycles in decades to combat persistent inflation. Interest rates were lifted rapidly and repeatedly, pushing global borrowing costs higher.

Because Singapore operates within an open financial system, local banks fund and hedge loans through global markets. As global funding costs rose, so did the SORA, which underpins most floating-rate home loans.

When funding costs increase, mortgage pricing follows.

2. SORA’s sharp climb

During the peak of the tightening cycle, the 3-month compounded SORA climbed above 3%. For homeowners on floating packages, monthly repayments rose quickly. Fixed packages also repriced upward as banks factored in higher hedging costs, elevated bond yields, global liquidity tightening, and increased risk premiums

This combination pushed home loan packages well above levels borrowers had become accustomed to during the low-rate decade that preceded 2022.

3. Affordability shock

For many households, the rise in mortgage rates created an affordability shock. Instalments increased substantially, particularly for larger private property loans. Buyers paused. Upgraders recalculated. Refinancing slowed.

That period is important context – because it explains why the subsequent decline felt so dramatic.

How Mortgage Rates Reset Through 2024–2025?

The turning point did not happen overnight.

The policy pivot was anticipated before it happened

By mid-2024, the Fed had paused further hikes and signalled that policy was “sufficiently restrictive.” Markets began pricing in eventual rate cuts well before they were fully implemented. This is critical.

Financial markets move on expectations. As global investors anticipated easing, bond yields moderated and hedging costs began to fall. Even before large or sustained cuts were delivered, funding conditions started improving. As a result, SORA began easing.

The sharp repricing of 2025

What analysts initially expected to be a gradual easing proved more decisive. At the end of 2024, 3-month compounded SORA was slightly above 3%. Through 2025, it fell sharply – reaching around 1.2% by mid-December. By 9 January 2026, it stood near 1.18%.

Fixed housing loan packages followed. At the start of 2025, many fixed packages were priced around 3.0%–3.2%. By year-end, banks were offering fixed rates in the 1.4%–1.8% range. This reset was driven by three main forces:

• Falling global funding costs
• Ample domestic banking liquidity
• Intense competition for market share

Spreads tightened aggressively. Some banks reduced the margin added to floating packages significantly, intensifying competition in both refinancing and new loan segments.

Domestic liquidity played a bigger role than many expected

While US policy shifts influenced expectations, Singapore’s mortgage repricing was also supported by strong local liquidity conditions.

Capital inflows, a resilient banking sector, and competitive dynamics meant that lenders could reprice home loans quickly once hedging costs declined. This is why mortgage rates in Singapore fell faster than many early 2025 projections anticipated.

Has the Major Rate Adjustment Already Happened by 2026?

By early 2026, the character of the rate discussion has changed again. The 3-month compounded SORA has been range-bound around 1.1%–1.2%. Fixed packages remain widely available between 1.4% and 1.8%.

Economist commentary suggests that SORA may bottom near 1% in the first half of 2026, with some forecasts pointing to a possible modest rebound toward roughly 1.3%–1.4% later in the year. A more aggressive downside scenario from Maybank Research suggests a potential dip toward 0.7% by December 2026 – though this is not the central consensus.

What does this imply?

• The dramatic falls seen from 2024 to 2025 are unlikely to repeat.
• Further declines, if any, are expected to be incremental.
• Stability, not collapse, defines the 2026 environment.

For borrowers, this is a psychological shift.

In 2023, the fear was that rates would keep rising. In early 2025, the hope was that rates would fall sharply. In 2026, the reality is that rates have largely normalised – and may fluctuate modestly within a narrower band.

The key risk today is not missing another major drop. It is assuming that today’s low rates will persist indefinitely.

What 2025 Taught Us About Forecasting Mortgage Rates?

The experience of the past year carries an important lesson. At the start of 2025, projections suggested the three-month compounded SORA might decline from around 3.3% to somewhere in the mid-2% range by year-end. Instead, it fell to around 1.2%. Markets priced in easing faster than policymakers delivered it.

This reinforces a broader truth about mortgage rate forecasts: Interest rate cycles rarely move in straight lines. Markets adjust on expectations. Forecasts often underestimate the speed of repricing when sentiment shifts.

For homeowners in 2026, this means relying solely on predictions is risky. The focus should instead be on whether your loan structure works across plausible scenarios – not just the most optimistic one.

Where this leaves borrowers in 2026

The macro phase of the cycle is largely complete. The aggressive tightening of 2022–2023 pushed mortgage rates sharply higher. The repricing of 2024–2025 brought them decisively lower. Early 2026 suggests stabilisation near cyclical lows.

We are no longer in a “falling rates” environment. We are in a low-but-no-longer-falling rate environment. And that distinction matters. Because when rates are near a floor:

• The upside from waiting shrinks.
• Structure matters more than direction.
• Spreads and flexibility can matter more than benchmark moves.

What Lower Rates Have Changed for Borrowers in 2026?

By early 2026, the sharp reset in the Singapore mortgage rate environment has already altered borrower behaviour. This shift is not theoretical – it is visible in refinancing volumes, product preferences, and how buyers compare packages.

When the three-month compounded SORA fell from above 3% in late 2024 to around 1.2% by end-2025, the impact on monthly repayments was immediate. Fixed-rate packages that started 2025 near 3% repriced into the 1.4%–1.8% range by December. That magnitude of change reshaped decision-making in three clear ways.

Refinancing & repricing surge

The most obvious reaction to lower rates was a refinancing wave.

Homeowners who endured peak-rate years began reviewing their loans aggressively once spreads narrowed and benchmark rates fell. For borrowers who had locked in packages during 2022–2023, refinancing into 2025–2026 pricing often translated into meaningful cash flow relief. But by 2026, the dynamic has evolved.

The first wave of refinancing was rate-driven – borrowers moved because rates had fallen sharply. Now, repricing decisions are more structural:

• Negotiating tighter bank spreads
• Shortening or removing lock-in constraints
• Adding partial prepayment flexibility
• Switching from legacy board rates to SORA-linked packages

The biggest savings from benchmark declines have already been captured. Today’s refinancing decisions are less about chasing another dramatic drop and more about improving long-term loan architecture.

Borrowers are also more realistic. After witnessing how fast rates can move in both directions, many now stress-test repayments before refinancing, rather than assuming the low-rate environment will persist indefinitely.

HDB to bank loan migration

Another clear behavioural shift has been the movement of some HDB borrowers toward bank financing.

The HDB concessionary loan remains fixed at 2.6%. When bank packages were above that level, the difference was marginal. But once bank fixed rates moved into the 1.5%–1.6% range, the savings gap widened noticeably.

For some households, this translated into several hundred dollars in monthly instalment difference, depending on loan size. That has encouraged comparisons and, in certain cases, migration. However, this is not a simple decision.

Switching from an HDB loan to a bank loan is effectively irreversible. Borrowers cannot revert to the concessionary scheme once they leave it. The decision therefore hinges on:

• Income stability
• Appetite for floating-rate variability
• Willingness to manage repricing cycles
• Long-term holding horizon

In 2026, the migration trend reflects improved affordability – but it also reflects greater borrower sophistication. More households are running the numbers carefully rather than switching impulsively.

Fixed vs floating preferences in 2026

Lower rates have also narrowed the pricing gap between fixed and floating packages.

Data reported in early 2026 shows floating-rate packages averaging roughly 1.47%–1.67%, while fixed-rate packages sit around 1.48%–1.75% for competitive loan sizes. That difference is far smaller than during the tightening cycle.

What has changed is psychology.

After several years of volatility, many borrowers now prioritise predictability. Even though floating rates are attractive, roughly four in five borrowers at some banks still opt for fixed packages.

This preference shift is not about chasing yield. It is about behavioural comfort. Borrowers who experienced repayments rising quickly in 2022–2023 now value:

• Certainty during the first one to three years
• Protection against modest rebounds
• Simpler cash flow planning

At the same time, floating packages have regained attention among more rate-aware borrowers – especially those comfortable reviewing their loans annually.

The takeaway in 2026 is not that one structure is universally superior. It is that borrower risk tolerance now drives decisions more than raw pricing differences.

How Much Further Can Mortgage Rates Realistically Fall In 2026?

By early 2026, most of the adjustment in the Singapore mortgage rate cycle has already occurred. The three-month compounded SORA declined from above 3% at end-2024 to around 1.18% by 9 January 2026. 

Fixed-rate packages repriced from roughly 3% to the mid-1% range during 2025. That scale of decline was substantial. The realistic question now is whether another meaningful leg down is likely.

Current market commentary suggests:

• SORA may dip toward the 1% level during the first half of 2026
• Some forecasts, including Maybank Research, see the possibility of a move toward 0.7% by December 2026
• Other projections expect stabilisation near 1.3%–1.4% by year-end

What stands out is not the exact forecast – but the magnitude. Even in more aggressive scenarios, further downside is incremental compared to the drop already seen. 

For borrowers, this reframes the calculus: Waiting for a 0.3%–0.5% potential decline must be weighed against the risk that spreads widen or rates stabilise instead. The large, obvious opportunity was 2024–2025. The 2026 environment is about marginal moves.

In other words, mortgage decisions today are less about capturing dramatic savings and more about ensuring structural resilience if rates drift modestly higher.

Key Indicators to Watch in 2026

Although the sharp easing phase is largely complete, several indicators still shape the trajectory of the Singapore mortgage rate landscape.

1. US Fed policy path

The Fed delivered multiple cuts in 2025. The 2026 outlook is more cautious, with expectations of a slower easing pace. Markets are watching:

• Whether further 25-basis-point cuts are delivered
• Whether communication signals an extended pause
• Leadership transitions at the Fed

Importantly, Singapore rates often react to expectations rather than official moves. Forward guidance matters more than the headline decision itself.

2. Inflation and growth data

Contained inflation reduces pressure for renewed tightening. However, stronger-than-expected growth or sticky price pressures could shift market expectations.

In 2026, markets are sensitive to surprises. Mortgage pricing responds to how investors interpret economic data – not just the data itself.

3. Bank spreads and competitive behaviour

Perhaps the most overlooked factor is bank spread behaviour. During 2025’s refinancing surge, competition drove spreads as low as 0.25% on some floating packages. That compression amplified the benefit of falling benchmarks.

In a stabilising rate environment, spreads may matter more than SORA movements. If funding costs rise or competition eases, banks could widen margins even without benchmark increases. For borrowers, this reinforces a critical shift: The benchmark rate is only part of the equation. The spread often determines the real long-term cost.

What this means for borrowers in 2026

The 2026 mortgage environment requires a different mindset from 2023. The risk is no longer a sudden spike from a tightening cycle. The risk is complacency. Borrowers should now focus on:

1. Structure over timing

With rates near cyclical lows, the benefit of waiting for perfect timing has diminished. What matters more is:

• Lock-in flexibility
• Repricing rights
• Partial prepayment options
• Total interest cost over holding horizon

2. Stress-testing repayments

Even if SORA stabilises near 1%, planning should assume moderate normalisation. Testing repayments 0.5%–1% above current levels builds safety into cash flow planning. This approach protects against future cycles without sacrificing present opportunities.

3. Matching loan type to life plans

The right home loan package depends on:

• Expected property holding period
• Upgrade or sale timeline
• Income visibility
• Risk tolerance

Short-term owners may prioritise flexibility. Long-term owners may value certainty. The most resilient borrowers in 2026 are those who align financing structure with personal timelines – not those chasing small rate differentials.

Final Thoughts: My Take as a Mortgage Advisor

From where I stand, the biggest lesson of the past two years is not that rates fell – it’s how fast they moved in both directions. We saw mortgage rates surge above 3%, then reset toward the low-1% range within a relatively short period. That kind of volatility should permanently change how borrowers think about risk.

In 2026, I do not see the environment as one where dramatic further savings are likely. Much of the easing has already happened. What matters now is positioning. If you are refinancing, upgrading, or buying:

• Do not assume today’s rate is permanent.
• Do not assume another major drop is guaranteed.
• Do not focus solely on the headline number.

Instead, focus on spread durability, lock-in structure, exit flexibility, and cash flow resilience. Lower rates create opportunity. But structure determines whether that opportunity becomes long-term stability.

Mortgage cycles will continue. Your loan should be built to survive them – not react to them. That is what disciplined planning looks like in 2026.

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