Choosing between a fixed and a floating mortgage rate affects cash flow and exposure to interest-rate changes. A fixed package keeps the rate unchanged for a stated period, while a floating package moves with a reference benchmark and lender spread.
When comparing a mortgage rate Singapore banks offer, borrowers should look beyond the headline percentage. Repayment predictability, lock-in terms, repricing options, tenure, and financial buffers can all affect cost.
DBS’s MyHome planner helps buyers estimate mortgage affordability, downpayment needs, and monthly mortgage repayments before comparing loan structures. The better choice depends on whether certainty or flexibility matters more to the household.
Quick Summary
- Fixed-rate fit: DBS notes that a fixed mortgage rate suits borrowers prioritising stable instalments over gains from falling rates.
- Floating-rate fit: A floating mortgage rate suits borrowers with room for repayment changes and market-linked pricing.
- Main trade-off: Fixed pricing offers certainty, while floating pricing may rise or fall with its reference rate.
- Cost check: MoneySense recommends comparing fees, terms, and effective borrowing costs, not only the headline rate.
Should You Choose a Fixed or Floating Mortgage Rate?
- Best for stable household planning: A fixed mortgage rate, because instalments remain consistent during the agreed fixed period.
- Best for responding to market movements: A floating mortgage rate, because pricing can adjust when its reference rate changes.
- Best for borrowers with limited repayment headroom: Fixed pricing generally offers greater short-term certainty.
- Best for borrowers with stronger financial buffers: Floating pricing may provide more flexibility.
The right choice depends on cash-flow resilience, future property plans, and tolerance for changing repayments.
Comparing Fixed vs Floating Mortgage Rates in Singapore
| Factor | Fixed mortgage rate | Floating mortgage rate |
| Rate setting | Set for a defined period | Benchmark, such as Singapore Overnight Rate Average (SORA), plus the bank’s spread |
| Repayments | Stable during the fixed period | May rise or fall at each reset |
| Rising rates | Temporary protection | Instalments may increase |
| Falling rates | No immediate benefit | Instalments may decrease after reset |
| End of initial period | Usually converts to a floating rate | Continues under package terms |
| Best for | Borrowers seeking certainty | Borrowers able to manage fluctuations |
Fees, lock-ins, and repricing terms can affect the total cost of either option, according to MoneySense’s borrowing-cost guidance.
Fixed vs Floating Mortgage Rates: In-Depth Comparison
How the Interest Rate Is Calculated
A fixed mortgage rate remains unchanged for the period stated in the package, not for the full tenure. DBS lists fixed periods of two to three years, while floating options may track three-month compounded SORA or the Fixed Deposit Home Rate benchmark.
A floating mortgage rate combines a reference benchmark with the bank’s spread. According to the Monetary Authority of Singapore, “SORA is the volume-weighted average rate of borrowing transactions in the unsecured overnight interbank SGD cash market in Singapore.” The applicable home loan rate is calculated by adding the lender’s spread to the relevant compounded SORA benchmark.
Which Mortgage Rate Offers More Predictable Repayments?
These figures show repayments on a S$500,000 loan over 25 years.
| Illustrative annual rate | Approximate monthly repayment |
| 2.0% | S$2,119 |
| 2.5% | S$2,243 |
| 3.0% | S$2,371 |
| 3.5% | S$2,503 |
A rise from 2.0% to 3.5% adds about S$384 a month. The figures are illustrations, not quotations, and exclude fees and insurance. Buyers can use the DBS MyHome planner to estimate mortgage affordability and monthly repayments using their financial details.
Better for predictable cash flow: Fixed rate
Which Home Loan Performs Better When Rates Rise or Fall?
A fixed package limits the immediate effect of rising market rates until the fixed period ends. The borrower may, however, continue paying the contracted rate when market rates fall. A floating package can benefit after a lower benchmark is applied at reset, but monthly mortgage repayments can also increase.
Better when protection matters: Fixed rate
Better when market responsiveness matters: Floating rate
Lock-In Periods, Repricing, and Refinancing Costs
The lowest advertised home loan interest rate may not have the lowest overall cost. MoneySense advises borrowers to assess fees and effective borrowing costs. Check:
- Early-redemption and clawback charges
- Legal or valuation fees
- Partial-prepayment limits
- Repricing or conversion options
- The post-promotional rate
Flexibility depends on the package terms, not the rate type alone.
Mortgage Affordability and Repayment Buffers
According to MoneySense, the Total Debt Servicing Ratio is 55% of gross monthly income. The Mortgage Servicing Ratio is 30% for applicable HDB and Executive Condominium purchases.
The CPF Board recommends retaining at least S$20,000 in the Ordinary Account when taking a bank loan. This buffer can help cover instalments during a rate increase or income disruption.
Better with limited repayment buffers: Fixed rate
Potentially suitable with stronger buffers: Floating rate
Frequently Asked Questions
Is a fixed mortgage rate always cheaper?
No. Cost depends on future benchmark changes, the bank’s spread, fees, and the rate charged after the fixed period.
What happens when the fixed period ends?
The loan usually moves to the floating rate stated in the letter of offer unless the borrower reprices or refinances. DBS recommends reviewing package terms before expiry.
How does three-month compounded SORA affect repayments?
MoneySense explains that the benchmark reflects compounded overnight SORA over three months. The lender adds its spread to calculate the applicable home loan interest rate.
Can borrowers switch between rate types?
Yes, subject to repricing, lock-in, clawback, and early-redemption conditions.
Is a floating rate better when SORA falls?
A floating mortgage rate may become cheaper after the next reset, but savings depend on timing, fees, and the bank’s spread.
How much repayment buffer is sensible?
MoneySense advises assessing housing costs against income, debts, and available savings. Borrowers should also stress-test instalments at a higher rate.
Choose a Mortgage Rate That Fits Your Finances
A fixed mortgage rate may suit borrowers who value repayment certainty, while a floating mortgage rate may suit those with stronger financial buffers and greater tolerance for change. Compare lock-in terms, fees, future rate adjustments, and total affordability before selecting a package.
To assess how either option could affect your budget, use the DBS MyHome planner to estimate your borrowing capacity, downpayment, and monthly mortgage repayments.
