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SINGAPORE: Mortgage rates in Singapore have fallen to their lowest in three years, and experts say the reprieve for home owners could extend into 2026 \u2013 though further declines may be modest.\u00a0<\/p>\n
Lenders here typically follow the cues of the US Federal Reserve, which delivered its third rate cut of the year last Wednesday (Dec 10).\u00a0<\/p>\n
Expectations for lower US interest rates have sent Singapore home loan rates into a sharp downtrend. At the start of 2025, fixed-rate loans were going at about 3.1 per cent. These have nearly halved to between 1.4 and 1.8 per cent, depending on the loan quantum, said SingCapital\u2019s chief executive Alfred Chia.<\/p>\n
These fixed packages \u2013 where the interest rate remains unchanged through a lock-in period of two to five years \u2013 are moving in tandem with floating rate loans, which are usually pegged to the three-month compounded Singapore Overnight Rate Average (SORA).<\/p>\n
SORA has fallen from 3 per cent in early January to 1.2 per cent as of Dec 12, its lowest level since August 2022.<\/p>\n
DBS senior rates strategist Eugene Leow noted that local interest rates began declining well before the Fed\u2019s cuts in September, due to high domestic liquidity and safe haven flows linked to investors reacting to US President Donald Trump\u2019s \u201cLiberation Day\u201d tariffs.<\/p>\n
Banks have also trimmed the spread \u2013 or margin \u2013 typically added to floating rate loans, from about 0.7 per cent to 0.25 per cent, said Mr Chia.<\/p>\n
Looking ahead to 2026, the Fed\u2019s latest policy signals suggest only a marginal easing path. New projections indicate just one-quarter percentage-point cut next year, and Fed chair Jerome Powell has said rate hikes are unlikely.<\/p>\n
\u201cThe message was clear: the era of pre-emptive easing is over,\u201d said Mr Daniel Siluk, a portfolio manager at Janus Henderson Investors, adding that the Fed\u2019s shift to a meeting-by-meeting approach has set \u201ca high bar for further cuts\u201d.<\/p>\n
The US central bank enters 2026 in a \u201cwait-and-see\u201d mode, with a new chair expected to be announced soon as Mr Powell\u2019s term ends in May. Mr Trump has hinted at appointing White House economic adviser Kevin Hassett, who is seen as favouring further cuts.<\/p>\n
Mortgage analysts said Singapore home loan rates will continue to follow the Fed\u2019s moves, but large declines are unlikely after the significant adjustments this year.<\/p>\n
DBS\u2019 Mr Leow said SORA may have already \u201cfound a floor\u201d. Mr Darren Goh, executive director of MortgageWise.sg, agreed that current rates likely reflect most of the expected US easing \u2013 barring an extraordinary economic shock such as a deep labour market slump.<\/p>\n
Nevertheless, banks are expected to continue offering competitive packages, including legal subsidies and cash rebates. This is especially so in the first quarter of the year when competition for market share intensifies, said Mr Chia.\u00a0<\/p>\n<\/div>\n