Sarah Chen
Three-year fixed mortgage rates in Singapore have climbed since January, and two-year packages have also risen, from around 1.35%-1.75% in January to roughly 1.80%-2.08% now (Cashew's own rate data, tracked January to October 2026). This reaches your instalment because a fixed package is only fixed for its own term, two or three years, and when that term ends your loan reverts to a floating rate. In Singapore that floating rate is usually pegged to 3-month SORA, the Singapore Overnight Rate Average: SORA is the interest rate banks here charge each other to borrow overnight, and the 3-month version averages that out over three months.
So the natural reaction is to assume rates are high, getting higher, and that you should rush into a fix. That reaction is aimed at the wrong number. Bank interest rates move in cycles, no loan package guarantees you a fixed rate for the whole of your mortgage term, and today's 3-month SORA of 1.23% sits below the 2.0% that the last five years have averaged, according to SORA data from the Monetary Authority of Singapore (MAS), Singapore's central bank, as of October 2026. The rate that decides what your home costs you is the average you pay across the life of the loan, not the one you were quoted this week.
Keeping that average down is a matter of active monitoring. That means knowing when your package ends, and refinancing, that is, moving your loan onto a new package, when a better one is available.
This piece is for private property owners on bank loans, and for HDB flat owners who have chosen a bank loan. If you're on an HDB concessionary loan, the loan HDB itself offers, your rate follows the CPF Ordinary Account rate, the interest rate paid on your CPF savings, not SORA, so nothing below changes your instalment.
Usually, when banks raise their fixed packages, it means they expect the cost of money to be higher over the next two or three years, so they charge for that expectation in advance rather than wait for it. That is a reasonable thing for a bank to do, and it is why fixed rates can move before anything visible happens to the floating rate underneath.
So the instinct is to compare today's quote with the quote you got last year, or with the rate you are paying right now, and conclude that borrowing has become expensive.
That comparison only looks back a year or two. Your mortgage runs for 20 or 25 years.
However, stretch the comparison out and the picture is slightly different. Here is where 3-month SORA has sat since 2005 (MAS 3-month SORA data, 2005 to present, as of October 2026; period averages calculated by Cashew):
Two things stand out. Today's 1.23% is well below the 2.0% that the last five years have averaged, so by the standard of the period most readers actually borrowed in, this is not a high rate. And it is above the 1.09% long-run average since 2005, so it is not a bargain either. Both are true.
These are figures for the floating benchmark, compared against its own history. The fixed packages in the news are priced on what banks expect that benchmark to do next. That's why fixed rates can rise while SORA itself stays in the middle of its range.
It also means the range above won't tell you whether a quote in front of you today is a good one. For that, compare quotes from several banks on the same day, and compare them against the floating rate your own loan reverts to when its term ends. The history tells you where the benchmark sits. Only the live quotes tell you whether you are being offered a competitive package.
The choice people agonise over, fix or float, is really a choice about the next two or three years. Not the next 25.
A fixed package fixes your rate for its own term. The packages in the news are fixed for two or three years. When that term ends, the loan reverts to a floating rate, and you are back inside the cycle.
Two dates often get confused here: the fixed term and the lock-in. The fixed term is how long your rate is held. The lock-in is the period during which leaving the package costs you a penalty.
Both are set out in your letter of offer, the document the bank gives you that states the terms of your loan. The two periods frequently run together, and they are not the same thing, so check your own letter rather than assume.
Across a 25-year loan you will sit in several packages at several different rates. That is how the cycle works, not a sign you planned badly. That's why the number that decides what your home actually costs you is the average of all those rates, not the one printed on this month's quote.
This is Cashew's own view, not a measured finding: we have no dataset comparing what reviewed loans pay against unreviewed ones.
Your fixed term ends. The loan reverts to a floating rate, which may sit above what other banks are offering new customers. If you review it and refinance, you move back to a competitive rate. Repeat that across the life of the loan and you spend your years near the middle of the range instead of parked at the top of it.
Active monitoring means knowing your fixed-term end date and your lock-in end date, and checking the market a few months before each.
You won't land exactly on the long-run average, and none of this is free. Refinancing carries its own costs, including legal and valuation fees, and a penalty if you move while still inside your lock-in. Factor those costs into the comparison.
No one can say for certain where rates will be in 2027, and any article that hands you a number for it is guessing.
What we do have: minutes of the latest meeting of the US Federal Reserve, the American central bank, show officials expect another rate rise, with no indication of when (CNBC, 7 October 2026).
That reaches Singapore because money moves freely in and out of the country. If US rates rise and Singapore's do not, money follows the higher return out, and Singapore banks have to pay more to keep deposits here. Not perfectly, and not instantly, but Singapore rates usually follow US increases.
On that evidence, the next move looks more likely up than down. That doesn't tell you by how much, or when, and it doesn't move where 1.23% sits against the figures above.
Singapore's core inflation rose to 2.2% in August 2026, but this does not directly raise mortgage costs because MAS manages policy through the S$NEER exchange rate band rather than a domestic interest rate. If anything, expectations of a firmer currency slope in October tend to soften SGD rates like SORA, making floating-rate loans more likely to benefit than suffer from this inflation print.
Sarah Chen·25 Sept 2026© 2026 Cashew. All rights reserved.
