Most Singapore Home Owners Still Prefer Fixed-Rate Loans Despite Lower Floating Rates

Singapore borrowers carry vivid memories of the 2022 to 2023 rate cycle, when mortgage rates surged to 4.5% and SORA spiked to 3.8%. That experience turned an entire generation of home owners into fixed-rate converts. Even though SORA has since retreated to around 1%, the psychological pull of knowing exactly what you will pay each month remains powerful.

Market data shows fixed-rate packages now hover around 2%, while the best floating-rate deals come in at roughly 1% or slightly below. That gap of 0.2 to 0.35 percentage points is the premium borrowers pay for certainty. For a S$500,000 loan over 25 years, the difference works out to roughly S$60 to S$100 per month. Many consider that a small price for peace of mind.

Dallas Goh, a private property owner featured in the report, locked in a three-year fixed-rate package at 1.55% when he refinanced earlier this year. At the time, floating rates were available at around 1%, but he decided the certainty was worth the extra cost. His reasoning was straightforward: rates can only go up from current lows, and a three-year lock shields him from any unexpected reversal in monetary policy.

His experience echoes the broader market sentiment. Mortgage brokers note that clients who lived through the 2022 spike are reluctant to go variable again, even when the numbers suggest floating would save money in the short term. The trauma of watching monthly repayments jump by 30% to 40% over just 12 months left a lasting impression.

For HDB flat owners, the decision carries an additional layer of complexity. The HDB concessionary loan rate stands at 2.6% for up to 20 years. While this is higher than current bank fixed rates, it offers unmatched stability since it is pegged at 0.1 percentage points above the prevailing CPF Ordinary Account rate and has barely moved in decades.

Crucially, refinancing from an HDB loan to a bank loan is a one-way ticket. Once you leave the HDB scheme, there is no going back. This makes the decision especially consequential for HDB borrowers. If bank rates rise sharply in the future, they cannot return to the safety of the concessionary rate. Financial advisors generally recommend that HDB owners only switch to bank loans if they are confident the savings will be sustained over a meaningful period.

The current preference for fixed rates is not set in stone. If SORA continues to drift lower and stays below 1% for an extended period, the cost of the fixed-rate premium becomes harder to justify. A borrower paying 2% fixed while floating rates sit at 0.8% is effectively spending an extra S$500 per month on a S$1 million loan for the privilege of certainty.

Conversely, any geopolitical shock, inflationary surprise, or reversal in US Federal Reserve policy could send rates climbing again, vindicating the fixed-rate majority. The lesson of 2022 to 2023 is that rate environments can shift faster than most home owners expect. For now, the market has made its choice: certainty over savings.