A fixed-rate home loan is a bank housing loan whose interest rate is held for the first few years and does not move with the market — up or down. MoneySense notes the fixed rate is a promotional one, lower than the rate that applies afterwards: when the fixed period ends the loan becomes variable, usually tracking 3M Compounded SORA, now 1.20%, or a bank-set rate.
Key takeaways
- MoneySense describes a fixed-rate loan as one where the rate is fixed and does not change for the first few years, does not fall when market rates fall, and becomes variable after the fixed period.
- The fixed rate is a promotional rate, and MoneySense states plainly that a promotional rate is lower than the rate for the remainder of the loan — so the instalment rises when the period ends unless the loan is repriced or refinanced.
- A floating package instead tracks a reference rate — the CPF Ordinary Account rate, 3M Compounded SORA or a bank-determined internal board rate — and banks must give advance notice, usually 30 days, before changing a housing loan rate.
- Interest is normally computed on monthly reducing balance (monthly rest), so each instalment covers the interest due and repays part of the principal, and the principal share grows over the life of the loan.
- Before signing, the bank must provide a property loan fact sheet setting out loan amount and tenure, total repayment amount, lock-in period, interest rate and repayment schedule and the rest — and an HDB flat buyer who takes a bank loan cannot later refinance back to an HDB loan.
What is fixed, and for how long
Only the rate is fixed, and only for the initial period of the package — not the tenure, not the instalment for the whole loan. What happens afterwards is written into the same contract.
MoneySense lists four questions for a bank before signing: how the reference rate is derived, how often it resets, under what circumstances it changes, and what special features apply and whether they can be removed later.
What the rate does to a SGD 600,000 loan
On monthly rest over 25 years. The gap between the rows is what a fixed period buys — and what the reversion can take back when it ends.
| Rate | Monthly instalment | Total interest over 25 years |
|---|---|---|
| 2% | SGD 2,543 | SGD 162,938 |
| 2.5% | SGD 2,692 | SGD 207,510 |
| 3% | SGD 2,845 | SGD 253,580 |
| 3.5% | SGD 3,004 | SGD 301,122 |
A partial prepayment, per MoneySense
MoneySense puts the interest saved at SGD 30,150 and SGD 60,300 respectively over the remaining tenure, assuming the rate rises to 5% and stays there. Penalties may apply, so the loan terms decide whether it is possible.
When the rate type matters
Five things people get wrong
- MoneySense — How home loans work — fixed and floating packages, monthly rest, the property loan fact sheet, refinancing and repricing
- MAS — SORA — the benchmark floating packages track
- CPF Board — CPF interest rates, Q4 2026 — the OA rate the HDB concessionary rate is pegged to
Official statistics for general information only. Not financial advice.
This page is provided for educational and informational purposes only. It does not constitute financial advice. All figures and worked examples are estimates for illustrative purposes, are subject to change, and do not reflect any individual’s circumstances. Always refer to MoneySense, MAS and the CPF Board and seek independent professional advice before making any financial decisions.