Last Updated on September 28, 2026
The homeowners in Singapore are asking a lot if the interest rates for home loans will fall in 2025. There is a probable yes. Mortgage rates in Singapore tend to follow the US Federal Reserve’s interest rate changes. As such, the cuts being made by the Fed mean mortgage rates should also come down in Singapore.
As of January 2025, the Fed is poised to leave interest rates unchanged, with the 4.25 percent to 4.50 percent range remaining in effect until inflation and employment figures prompt cuts. The Fed’s stability suggests gradually easing mortgage rates in Singapore through 2025.
Current Mortgage Interest Rates Trend.
The mortgage rates that were increasing in 2023 slowly began to flatten. In September 2024, the Federal funds rate fell for the first time, causing Singapore’s benchmark rates to likewise fall.The 3M Compounded SORA rates have shown a downward trajectory, as illustrated below:
| Month | 3M Compounded SORA Rate |
|---|---|
| 1 July 2024 | 3.6305% |
| 1 August 2024 | 3.6384% |
| 2 September 2024 | 3.5694% |
| 1 October 2024 | 3.4932% |
| 1 November 2024 | 3.3658% |
| 2 December 2024 | 3.2093% |
| 2 January 2025 | 3.0227% |
As of February 2025, mortgage interest rates hover between 2.5% and 2.75%. This is significantly lower than the rates of over 4.% % at the end of 2022. The rest of 2025 will likely see fixed home loan rates fall below 2% in the next 18 months or so. But the pace of decline is expected to be gradual rather than sharp.
Strategies for Homeowners
Against the backdrop of declining mortgage rates, many homeowners are choosing to refinance. Now is an excellent time if you haven’t considered repricing or refinancing. Choosing a fixed-rate loan helps you pay the same amount every month due to stable rates.
Switching to a fixed-rate loan can save a lot if you are on a floating-rate loan. Also, it will help to look for loans with flexible terms, like a short lock-in period, so that you can adapt to further rate changes.
Considerations for New Home Buyers
As we approach 2025, the property market looks set for stability and growth. With good home loan rates, buyers may think it is a good time to invest in new properties. However, caution is advised Make sure your budget will accommodate potential hikes in home loan repayments and assess the total costs of the loan packages, not just the initial promotional rates.
Doing your homework is essential if you’re looking to buy a new home, refinance your existing loan, or get a property for investment purposes. Choose the loan features that fit your financial circumstances, as the best loan for one can be the worst for another.
Refinance your home loan today and take advantage of the current market conditions!
Lock-In vs Floating Rates
A locked-in mortgage keeps your rate fixed for a set period, usually two to five years, so repayments stay predictable — this suits homeowners who value consistency or plan to keep the property long-term. Fixed rates start slightly higher than floating ones and may carry early-repayment penalties, but they protect you from future rate hikes and make long-term budgeting easier.
Floating rates move with market benchmarks like SORA, adjusting periodically. When rates drop, monthly payments can fall too, making floating attractive if you expect a softening rate environment or plan to hold the property for a shorter period. The trade-off is less predictability and higher risk if rates climb, but usually no long-term lock-in and more flexibility to refinance or switch lenders.
How to Secure the Best Mortgage Rate
Mortgage rates are shaped by the state of the property market, your credit score, and your chosen loan term — shorter terms often come with lower rates but require larger monthly payments. Since banks are the main source of financing for private property, shopping around across multiple lenders or mortgage brokers is one of the most effective ways to find a better rate; different lenders assess risk differently, and comparing offers (including fees, not just the headline rate) can reveal real savings that aren’t obvious at first glance.
How Mortgage Rates Shape Market Demand
Rate movements affect more than individual repayments — they shift market-wide behaviour. When rates rise, buyers reassess budgets and resale demand often softens first, especially among first-time buyers and OCR resale buyers operating close to their TDSR limits. When rates stabilise or ease, confidence returns quickly: upgraders who paused during high-rate periods re-enter the market, and buyers may expand their search into higher price segments as monthly repayments become more comfortable.
Not every segment reacts equally. Mass-market buyers feel rate changes more acutely since their loan amounts sit closer to TDSR limits, while higher-income or luxury-segment buyers — who typically finance a smaller share of the purchase — see their mood affected more than their actual ability to transact.
