Fixed or floating?

James Lim · CEA Reg. R063631F · PropNex Realty Pte Ltd

The US Federal Reserve left its benchmark rate at 3.75 to 4% on 28 October, on a 10 to 2 vote, with Governor Lisa Cook and Cleveland Fed President Beth Hammack both voting to raise it. The statement kept the line that inflation remains elevated, and by the close futures priced a December increase at roughly 80 to 85%, up from 78% a day earlier. For a Singapore borrower the pause changes less than it looks. Banks repriced fixed packages on expectations in late September, floating rates follow SORA with a lag, and the two now sit close together: Mortgage Master’s table on 28 October shows fixed from 1.75% and floating from 1.47% on a completed home, a gap of 0.28 points, or about $133 a month on a $1 million loan over 25 years. That gap is the price of insurance against the next two Fed meetings. Whether to pay it depends on when your lock-in ends, what you are buying, and how much of the bank forecasts you believe.

What did the Fed decide on 28 October, and why is December the date that matters?

It held, but the vote and the statement both lean toward a hike at the next meeting. The Federal Open Market Committee kept the target range at 3.75 to 4% by 10 votes to 2, with Cook and Hammack preferring a quarter-point increase. Cook had never dissented in four years on the board; Hammack also dissented in July. The statement upgraded growth from a solid to a strong pace, said inflation remains elevated, and closed with a promise to deliver price stability. Chairman Kevin Warsh repeated it at the press conference: no ifs, ands or buts. Reuters put the market-implied chance of a hike at the 8 to 9 December meeting at about 80%, with another increase likely by March; Fox Business recorded CME FedWatch at 82.6% after the decision, from 78.3% a day earlier, and CNN had it at 85% by the close. The September move was the first US hike since 2023, so December would confirm a cycle rather than a one-off.

The reason December matters more than October for a Singapore mortgage is how fixed rates get made. Banks price one- to three-year fixed packages off Singapore dollar swap rates plus a margin, and swap rates move on expectations, not on the decision itself. OCBC’s head of home loans told The Straits Times that one- to three-year swap rates rose nearly 0.3 percentage points in September and that the bank lifted its fixed packages by about 0.2 points in the week of 21 September, days after the first hike. A December hike that is 80% priced is therefore mostly inside the fixed quote you can get today. What is not priced is a third hike, a faster SORA climb, or the Fed stopping after one more move, and those are the scenarios the fixed-or-floating choice is really about.

How far have Singapore fixed and floating rates moved since the September hike?

Fixed packages are up roughly 0.2 to 0.45 points, and as much as 0.7 at Standard Chartered, and now run from 1.75% for large, clean loans to 2.55% for a three-year term on a $500,000 loan, while floating packages sit between about 1.4% and 1.8% because SORA has only crept from 1.20% to 1.26%. The Straits Times’ checks on 2 October, citing Mortgage Master’s website, found at least four fixed options for a $500,000 loan above 2%: Maybank’s three-year at 2.55%, OCBC’s three-year at 2.08%, Citi’s two-year at 2.2% and Standard Chartered’s one- and two-year at 2%, after a 0.2-point rise on 1 October. PropertyNet’s rate table shows the same drift at the top end: the best two-year fixed for private property moved from 1.40 to 1.45% in September to 1.85% on 20 October, and Standard Chartered’s two-year went from 1.70% to 2.40%. Mortgage Master’s page on 28 October lists fixed from 1.75% and floating from 1.47% on a completed home, and floating from 1.42% on a building-under-construction loan. The “from” rates belong to bigger loans and cleaner profiles; a $500,000 loan is quoted higher.

Floating has moved less because the benchmark has moved less. UOB’s markets desk put the three-month compounded SORA at 1.2568% and the daily SORA at 1.5161% on 22 October, against a low of 1.08% on 15 May and about 1.20% in mid-September. DBS’s Joanne Goh gave The Straits Times the reason it will not simply track the Fed: Singapore manages inflation through the exchange rate rather than a policy rate, and the banking system is flush with liquidity, so local rates and yields are unlikely to climb as high as US ones. MAS confirmed the setting on 14 October, keeping the Singapore dollar on its appreciating path with no change to the band, and forecast core inflation of 1.5 to 2.5% for 2027 while flagging upside risks. The practical reading: SORA rises with the Fed, but by less and later.

Fixed or floating: what is the 0.28-point gap actually paying for?

It is paying for insurance against SORA averaging more than about 1.54% over the life of the fixed term, and UOB’s forecast already has it there by early 2027, so at today’s prices the two are close to a coin flip and the fixed buys certainty cheaply. The arithmetic is short. A floating package costs SORA plus the bank’s spread, which is about 0.2 points on the best deals and up to 0.6 on ordinary ones. A fixed package at 1.75% therefore breaks even when SORA averages 1.54% on a 0.21 spread. UOB’s path runs 1.40% in the fourth quarter, 1.50% in the first quarter of 2027, 1.57% in the second and 1.63% in the third, an average of about 1.53% over the next year. On that path a floating borrower pays roughly what the fixed borrower pays, and a little more in the second year. If Maybank’s steeper path is right, floating ends clearly above fixed. If the Fed stops after December and SORA stalls near 1.3%, floating wins by about $115 a month per $1 million. That is the whole bet.

Two numbers to carry around. Each quarter point costs about $121 a month per $1 million borrowed at today’s levels, so a December hike that passes fully into SORA, which it will not, would add about that much to a floating instalment. And the fixed premium today is $133 a month per $1 million, which is a little more than one quarter point. You are paying one Fed move to be protected against the second and third. By late 2022 the same insurance cost far more: The Straits Times notes three-year fixed rates were about 1.15% in late 2021 and reached 4.25 to 4.5% at the three local banks by November 2022. Nobody who fixed in late 2021 regretted it, and nobody who fixed in November 2022 enjoyed it. The lesson is not that fixed is right; it is that fixed is cheap when the gap is narrow and the direction is up, which is where we are.

Your lock-in ends before the March meeting. What should you do?

Collect a repricing quote from your own bank now, compare it with a two-year fixed from the open market, and lock before 9 December if the fixed quote is within about 0.3 points of the floating alternative. Do not break a lock-in to do it. MoneySense’s sequence is the right one: ask your existing bank for its repricing options first, then ask the questions that decide the real cost, namely whether terminating the current package triggers a penalty, a clawback of subsidies (typically legal or valuation), extra legal fees or a conversion fee, and whether the new package carries its own lock-in. Repricing with your own bank is usually the cheaper quote because it skips the legal and valuation work of a full refinance, and banks must tell you in advance, usually 30 days, before changing the rate, so you will not be surprised mid-month.

Timing is the part people get backwards. Fixed quotes move before the Fed does, not after. A borrower who waits for the 9 December decision to “see what happens” will be quoted a rate that already contains it, plus whatever the swap market has added about March. The Straits Times’ example is a private owner who refinanced into a two-year fixed at 1.4% in June 2026; the cheapest two-year fixed on the market is now 1.75%, and most are higher. The brokers in that report split on tenure rather than direction: Redbrick’s Clive Chng calls fixed an affordable insurance given the narrow gap, while Mortgage Master’s David Baey expects floating to be poor for the next six months to a year but prefers one-year fixed terms because he thinks the inflation is cost-driven and could tip into a recession that brings rates down again. With pure one-year fixed packages now down to OCBC and RHB, both with two-year lock-ins, and Standard Chartered’s one-year deal rolling into a floating rate in its second year, the practical compromise is a two-year fixed with a free conversion clause, so you can reprice if the cycle turns in 2027.

You are signing a new loan for a purchase or a BTO. Fixed, floating, or the HDB loan?

For a private purchase, take the two-year fixed if you need a predictable instalment and floating if you expect to sell or refinance within two years, and for an HDB flat a bank fixed at 1.65 to 2.3% beats the 2.6% HDB loan on cost today, with one catch that matters more than the rate. The HDB loan is pegged at 0.1 points above the CPF Ordinary Account rate and has sat at 2.6% for two decades; banks are quoting below it on every term, from Hong Leong’s two-year fixed at 1.65% to OCBC’s five-year fixed at 2.28%, and DBS sells an HDB package at 1.78% for three years, 2.2% in years four and five and 2.4% from year six, guaranteed to stay under the OA rate. The catch is MoneySense’s one-line rule: an HDB flat buyer cannot refinance a bank loan back into an HDB loan. You can leave the HDB loan once; you cannot return. For a first flat with a thin buffer, the HDB loan’s flexibility on prepayment and its stability are worth real money even at 2.6%.

Two facts make the new-loan decision calmer than the headlines. First, a rate rise does not change how much you can borrow: MAS rules make banks assess the total debt servicing ratio, and the mortgage servicing ratio for HDB flats and ECs, at a medium-term floor of 4% for residential loans, so the bank already stress-tested you at more than double today’s fixed rate. Second, buyers have been de-risking on their own. The Straits Times reported on 18 October that, on OCBC’s figures, new-launch purchase prices rose 49% between 2021 and the first half of 2026 while median mortgage sizes rose 35%, that the share of OCBC new-launch borrowers maxing out the 75% loan-to-value limit fell from 67% to 52%, and that nearly eight in ten of OCBC’s new-launch borrowers took loans of $1 million or more in the first half of 2026, up from four in ten in 2021, so the typical buyer is putting in more cash and CPF than the rules require. The same report notes mortgagee-sale listings at their highest since the first half of 2021, a mix that includes investors who leveraged up in 2020 to 2022 and landlords whose rent no longer covers the instalment, maintenance and taxes. Structure the new loan so it still works at 3% and you will never be one of them.

Related: the November 2026 BTO guide, including the HFE letter and the loan choice it forces →

You are already on a floating package. Should you switch now?

Only if your package has a free conversion or your lock-in has already ended; otherwise the penalty is likely to exceed the saving, because the saving today is close to zero and only appears if SORA climbs past about 1.5%. Read the property loan fact sheet the bank gave you at signing. It states the lock-in period, the penalty for early repayment or switching, and a rate-change illustration; MoneySense’s advice is to ask the bank to walk you through it, and the questions to ask are the same ones as for refinancing. If the fact sheet shows a free or low-cost conversion, the test is simple: convert when the fixed quote is within 0.3 points of your current all-in rate, which is the case for most borrowers this week. If it shows a penalty on the outstanding balance, the arithmetic rarely clears. On a $1 million loan the fixed premium is $133 a month, so even a penalty of a few thousand dollars buys back more months of protection than the first year of the cycle is likely to deliver. Ride the float, note the 9 December date, and revisit in January when the lock-in clock and the Fed’s next dot plot are both clearer.

Related: how a Fed hike reaches a Singapore mortgage, step by step →

Related: how much you need to earn to buy a condo in Singapore, by price band →

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