Falling Home Loan Rates Could Save Singaporeans Thousands — If They Take Action

For most, buying a home is the single biggest financial milestone of their lives. Precisely because of that, the opportunity to save on a mortgage is greater than almost any other expense.

Just a year ago, home loan packages in Singapore hovered above 3 per cent, and in earlier years they climbed even higher. Today, the situation is very different. The most competitive packages available in 2025 are now between 1.7 and 2 per cent, depending on loan size — a drop of more than 40 per cent from a year ago.

The financial impact of this decline is significant. A homeowner with a $1 million mortgage would have paid about $30,000 a year in interest at a 3 per cent rate. At today’s lower rates of around 1.8 per cent, the annual cost falls to roughly $18,000. That is a saving of $12,000 a year, simply by refinancing.

Yet despite such potential savings, many borrowers remain on higher-cost loans. One reason is the lock-in period common to most mortgages in Singapore, typically lasting two to three years. Homeowners face a penalty if they refinance too early. Once this period ends, however, banks often shift customers onto less competitive “board rates.” While staying with the same lender may feel like the safest option, in reality it is often the most expensive.

Another factor is perception. Mortgage jargon such as “SORA,” “lock-ins,” and “spreads” can be intimidating. Many borrowers also imagine the refinancing process to involve piles of paperwork and multiple bank visits, while some assume their bank will automatically offer them the best available deal. In practice, this combination of confusion and inertia means thousands of dollars are lost each year.

Cashew, a digital mortgage comparison platform and broker, allows homeowners to review hundreds of packages from all major banks in minutes. By providing personalised recommendations and removing the need for manual applications, it provides a more transparent and convenient way for borrowers to ensure they are not overpaying.

With interest rates at multi-year lows, financial advisers stress that reviewing existing mortgages has rarely been more important. It could be the simplest step towards unlocking meaningful savings on their largest financial commitment.