Home loan rates have fallen steadily since their peak at the end of 2023, which means packages available in 2026 are materially cheaper than those signed in 2023 and 2024 (DollarsAndSense, 17 August 2026). That is a fact about the market, not an instruction about your loan.
The cohort with the most to gain is narrow and identifiable: borrowers who locked in at or near the end-2023 peak. They carry the widest gap between contracted rate and currently available rates, and by 2026 most of them are past a standard two- or three-year lock-in. Everyone else is running a different calculation.
Most floating packages in Singapore are now pegged to compounded SORA rather than legacy board or SIBOR rates, so the comparison between your current package and a new one is more transparent than it was a few years ago. The obstacle is not information. It is cost and timing.
Three options, not two
The table below sets out what each route typically costs and what it realistically buys. Figures are indicative market ranges, not quotes.
| Option | Upfront cost (S$) | Lead time | Rate improvement | Suits |
|---|
| Reprice with existing bank | 0 to 800 admin or conversion fee | 1 to 2 months | Smaller; bank has less incentive to sharpen | Borrowers wanting minimal paperwork, or with a small outstanding balance |
| Refinance to a new bank | ~2,500 legal and valuation, offset by a ~2,000 cash rebate from the new bank (net ~500) | 3 months' notice plus processing | Largest; full market pricing available | Balances above roughly S$400,000, past lock-in, no live clawback |
| Do nothing until lock-in ends | 0 | n/a | None now | Anyone facing a penalty of 1.5% of outstanding, which almost always exceeds the saving |
The takeaway: repricing is cheap and quick but usually leaves basis points on the table, and refinancing only wins once the saving clears the switching cost.
The breakeven arithmetic
Take a borrower with S$600,000 outstanding, 22 years remaining, on a contracted 2.4% typical of a package signed in 2024, looking at a new package at 1.7%. Switching costs run to S$2,500 in legal and valuation fees, but the new bank offers a S$2,000 cash rebate to offset this, leaving a net cost of S$500. Assume no lock-in penalty or clawback applies.
Monthly instalment is calculated over 264 remaining months.
- At 2.4%: S$2,928
- At 1.7%: S$2,726
- Monthly saving: S$202
S$500 divided by S$202 is 2.5, so the move pays back in about two and a half months. Over the remaining tenure the difference is substantial, but the two-and-a-half-month figure is the one that decides whether to act.
Now change one assumption. If the borrower took a legal fee subsidy from the current bank within the past three years, a clawback of S$2,000 to S$3,000 may still be live. Added to the net switching cost of S$500, total cost becomes S$2,500 to S$3,500, and breakeven stretches to 12 to 17 months. Still worth doing at a 0.7 percentage point gap, and even at 0.4 points the arithmetic mostly holds. At a 0.4-point gap the monthly saving on the same loan is roughly S$117, and a S$3,500 cost takes about 30 months to recover.
What to check before you do anything
Three dates and one number. The lock-in expiry date on your facility letter. The clawback expiry date on any subsidy you accepted, which is often three years from disbursement and runs separately from the lock-in. The notice period your bank requires, commonly three months, which means starting the process before the lock-in lapses rather than after. And the gap between your contracted rate and what is quoted today.
If the gap is under half a percentage point and a clawback is live, the arithmetic says wait. If you signed in late 2023 and the lock-in has expired, it almost certainly does not.
Sarah Chen
