Rate Bottom Expected Q2 2026: Is Now the Best Time to Refinance Your Home Loan?

UOB Strategist: Singapore Rates to Bottom in Q2 2026—Why This May Be Your Best Refinancing Window

UOB strategist Peter Chia expects Singapore interest rates to hit their lowest point in the second quarter of 2026 before gradually climbing—creating a narrow window for homeowners to lock in near-historic savings on their mortgages. With SORA currently hovering around 1.0–1.2% and bank mortgage packages at levels not seen since 2022, the big question is whether now is the moment to refinance, or whether waiting a few more months could squeeze out even better terms.​

What UOB's Forecast Means for You

According to UOB senior foreign exchange strategist Peter Chia, SORA is projected to bottom out around 1% in Q2 2026, then rise gradually to approximately 1.39% by year-end. This forecast is based on expectations that Singapore rates will stabilise ahead of US Federal Reserve cuts, which are projected for Q3 2026. For homeowners, this creates a "hedging window" in Q1 and Q2 2026: rates are near their floor now, and if you wait too long, you may miss the best opportunity to lock in savings before the slow climb begins.​

Current Mortgage Rate Landscape

As of mid-January 2026, here is where rates stand:​

• HDB Concessionary Loan: Fixed at 2.60% p.a. (CPF OA rate + 0.1%)
• Fixed-rate bank packages: 1.35%–1.75% p.a. for the first 2–3 years
• SORA floating packages: Around 1.30%–1.70% all-in (3M SORA + 0.25–0.40%), depending on loan size and profile
• 3-month SORA: Currently around 1.0–1.2%, the lowest since August 2022

The gap between HDB loans and bank packages has never been wider in recent years, which is why many homeowners are now considering refinancing. At the same time, Singapore 10-year government bond yields have started ticking upward to around 2.20%, signalling that the easiest rate cuts are likely behind us.​

Should You Refinance Now or Wait?

When you refinance from a 2.60% HDB loan to a 1.45%–1.60% bank loan, the rate gap translates into significant cash savings. Here's what the savings could look like annually:

• S$300,000 loan (e.g., 3-room HDB): ~S$2,160 saved per year
• S$500,000 loan: ~S$3,600 saved per year
• S$700,000 loan (e.g., condo): ~S$5,100 saved per year
• S$2 million loan (larger condo): ~S$14,400 saved per year

For many households, these monthly savings can ease cash flow significantly, freeing up money for daily expenses, investments, or building an emergency buffer.

The timing question comes down to your personal risk tolerance and how much rate movement you're willing to bet on. If UOB's forecast is accurate, SORA may drop another 10–20 basis points by Q2 2026 before stabilising. For most homeowners, locking in savings now at 1.35%–1.60% is better than holding out for marginal improvements that may never materialise—especially when bond yields are already signalling that the market's expectations have shifted.​

Historically, the refinancing market moves in waves. When rates are clearly trending down, homeowners wait. When they stabilise or start rising, there's a rush. By the time everyone realises rates have bottomed, the best packages are often gone.

Fixed vs. Floating: Which Makes Sense Now?

If you expect SORA to stay low through mid-2026 before rising modestly toward 1.4% by year-end, a SORA floating package may offer slightly lower rates in the near term. However, if you value certainty and want to lock in today's low rates without worrying about monthly fluctuations, a 2- to 3-year fixed package at 1.35%–1.75% may be more suitable.​

Many homeowners in 2026 are opting for a hybrid strategy: taking a short fixed period to lock in current low rates, then reassessing when the fixed term expires. This approach gives you the best of both worlds—stability now, flexibility later.

The Bottom Line

Rates may dip slightly further by Q2 2026, but the window for locking in near-historic savings is closing fast. For most homeowners, refinancing now at 1.35%–1.60% beats the risk of waiting for marginal rate drops that may not materialise—especially with bond yields already signaling that the market expects rates to stabilise soon.​

If you're still on a 2.60% HDB loan or an older bank package above 2%, the savings are immediate and substantial. The question isn't whether you should refinance—it's whether you're willing to act now or risk missing the opportunity.​

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