Floating rates are cheaper right now. Most Singapore homeowners are choosing fixed anyway.
According to reporting by The Straits Times (7 May 2026), the majority of Singapore home owners still prefer fixed-rate mortgages even as floating rates have fallen below fixed-rate levels. The two reasons cited most often: predictable monthly repayments, and protection against future rate increases.
The trade-off in plain terms
A fixed rate (typically 2Y or 3Y) locks your interest cost for the agreed period regardless of what market rates do. A floating rate, usually pegged to the Singapore Overnight Rate Average (SORA), moves with the market. When SORA falls, your repayment falls. When it rises, so does your bill.
Right now, floating rates are lower. That means a borrower on a floating package pays less each month than an equivalent borrower on a fixed package. The gap is real money, not a rounding difference.
So why are most borrowers still choosing fixed?
Predictability has a price, and most borrowers are willing to pay it
A fixed rate is, in effect, an insurance premium. You pay slightly more today to eliminate the risk of paying significantly more tomorrow. For most households, a mortgage is the largest single liability on their personal balance sheet. The monthly repayment is a fixed cost that competes with everything else: groceries, school fees, CPF contributions, savings targets. Uncertainty in that number is genuinely disruptive, not just psychologically uncomfortable.
This is not irrational behaviour. It is a reasonable preference for cash-flow certainty over expected-value optimisation. A borrower who fixes at, say, 1.50% for two years knows exactly what they owe for 24 months. A borrower on a floating package at a lower rate today saves money if rates stay flat or fall further, but absorbs the full impact if rates rise.
What this means if you are deciding now
The fixed-versus-floating decision depends on three things: your sensitivity to monthly payment variation, your view on where rates go from here, and how long you plan to hold the loan before refinancing.
If your household budget has limited slack, the case for fixing is strong even when floating rates are cheaper. The cost of being wrong on rates, measured in monthly cash-flow stress, is asymmetric. A rate rise of one percentage point on a S$600,000 loan adds roughly S$500 per month to your repayment. A rate fall of the same magnitude saves you the same amount, but you were already managing.
If you have meaningful financial buffer and a clear refinancing plan, floating rates offer genuine savings in the current environment. The risk is that rates move against you before your next refinancing window opens.
The refinancing angle
For borrowers already on fixed packages approaching the end of their lock-in period, the current environment creates a real decision point. Floating rates are lower, but the market-wide preference data suggests most borrowers will roll into another fixed package rather than switch. That preference is not wrong, but it should be a deliberate choice, not a default.
Before your lock-in expires, compare the all-in cost of fixing again against the floating alternative, factoring in your remaining loan tenure, your monthly cash-flow position, and any early repayment penalties on the outgoing package. The spread between fixed and floating rates, and your own risk tolerance, should drive the answer, not habit.
The majority preference for fixed rates tells you something about how Singapore borrowers weigh certainty against cost. It does not tell you what the right answer is for your specific loan.
Sarah Chen
