Singapore Mortgage Rate Downturn: How SORA Reshapes 2026 Property Logic
As of January 2026, Singapore mortgage rates have rapidly declined from around 3.1% in early 2025 to approximately 1.4%–1.8% (depending on loan amount and package), significantly reducing financing costs. This article focuses on the SORA rate mechanism, using the latest quarterly data from URA and HDB to analyze the impact of interest rate changes on private and public housing transactions, price elasticity, buyer structure, and 2026 risk boundaries, and provides actionable interest rate strategy frameworks for 'owner-occupation and investment'.
1) Conclusion First: This Round of Mortgage Rate Decline is Changing the Market's "Marginal Buyers"
- Interest Rate Status: In January 2026, mainstream mortgage quotes in Singapore have fallen back to approximately 1.4%–1.8% (variations may occur due to differences among banks, fixed/floating rates, loan amounts, and lock-in periods).
- Market Feedback: Lower financing costs increase affordable monthly payments and loan amounts, thereby raising the bidding power of "marginal buyers"; however, prices will not rise unconditionally, as supply, policies, and buyer price resistance have become more evident in 2025.
- Key Judgment: The 2026 market resembles a combination of "transaction recovery + moderate prices": transactions become smoother, home-swapping more active, but price increases rely more on location/product quality/school districts/scarcity, rather than being driven solely by interest rates.
This article will unfold with three anchor points: (A) Why interest rates are declining and how they will transmit; (B) What the latest data on private and public housing suggests; (C) How buyers and investors should choose between fixed/floating rates and refinancing timing in 2026.
2) How to View Mortgage Rates: Don't Just Focus on 'Bank Advertised Rates,' Focus on SORA and the Spread
2.1 What is SORA, and Why Does It Determine the 'Base' of Floating Rates?
SORA (Singapore Overnight Rate Average) is published by the Monetary Authority of Singapore (MAS) and is the volume-weighted average rate of the unsecured overnight interbank market in Singapore. Most floating mortgages are priced in the form of 1M/3M (compounded) SORA + spread.
- Floating rate = SORA (benchmark) + bank spread
- When the market expects external interest rates to fall and funding costs to decrease, SORA typically weakens, causing the 'base' of floating mortgages to shift downward.
2.2 Why Did Interest Rates Rapidly Decline from 2025 to 2026?
- External factors: The market formed expectations for a lower U.S. dollar interest rate path, driving down regional funding prices.
- Local transmission: The mortgage market in Singapore is highly competitive, and banks are more proactive in lowering fixed rates and floating spreads when 'competing for high-quality borrowers.'
2.3 Key Data (for Quickly Gauging Market Temperature)
| Time Point / Caliber | Market Observation | Meaning |
|---|---|---|
| Early 2025 | Fixed mortgages around 3.1% (at market quote level) | High-interest phase, with significant monthly payment pressure |
| End of 2025 (media references) | Fixed mortgages have nearly 'halved' to around 1.4%–1.8% | Significantly looser borrowing environment |
| January 2026 (market quotes / intermediary caliber) | Lowest fixed rates visible from about 1.3% onwards, floating rates visible around 1M SORA+0.25% (approximately 1.4% range) | Entering a low-interest competitive range, where spreads and terms become more important |
Practical reminder: For buyers, 'the actual obtainable rate' always depends on: loan amount, income and credit, property type (HDB/private), whether refinancing/transferring, lock-in period, penalties, and legal fee subsidies, among other combined terms.
