If you have been monitoring Singapore mortgage rates over the past few months, you may have noticed a significant shift taking place across the market.

 

For much of late 2025 and early 2026, borrowers benefited from some of the lowest mortgage rates seen in recent years. Many homeowners expected rates to continue falling throughout 2026, especially with expectations that global central banks would eventually begin cutting interest rates.

 

However, the market is now telling a different story.

 

Over the past few months, we have repeatedly highlighted that banks were unlikely to maintain these exceptionally low fixed-rate packages indefinitely. While some borrowers chose to wait in anticipation of even lower rates, banks have instead begun moving rates upwards.

 

Local banks were the first to make their move, quietly adjusting their fixed-rate packages higher. As we anticipated, foreign banks have now followed suit.

 

As of June 2026, we are seeing local banks offering fixed rates from approximately 1.68% for larger loan amounts of around $2 million. For smaller loan sizes, rates are generally between 10 and 20 basis points higher.

 

Foreign banks have also increased their fixed-rate offerings by approximately 15 basis points since the beginning of June, with the most competitive packages now hovering around the 1.60% mark.

 

While these increases may appear small on paper, they could be the start of a broader trend that borrowers should pay attention to.

The End of the “Wait and See” Period?

Earlier this year, many market participants were expecting mortgage rates to continue trending lower.

 

This expectation was not unreasonable. Inflation across many developed economies had started moderating compared to the highs experienced during 2022 and 2023. Economic growth was also slowing in several regions, leading many analysts to believe that central banks would eventually begin cutting interest rates to support growth.

 

Naturally, borrowers expected mortgage rates to fall alongside these anticipated rate cuts.

 

However, financial markets rarely move in a straight line.

 

While rate cuts remain possible in the longer term, several new developments have emerged that are creating uncertainty about the timing and magnitude of those cuts.

 

As a result, banks are becoming increasingly cautious about offering extremely low fixed-rate packages.

 

The recent increases in fixed mortgage rates suggest that lenders may be preparing for a more volatile interest rate environment than what was previously expected.

 

Floating Rates Remain Lower Than Fixed Rates

One of the most common questions we receive from clients today is whether they should continue with floating-rate packages or switch to fixed rates.

 

At present, floating-rate packages remain cheaper than fixed-rate packages.

 

Most floating-rate packages are currently delivering effective interest rates (EIR) of approximately 1.30% to 1.40%, depending on the bank and package structure.

 

For many homeowners, this means floating rates remain around 20 to 40 basis points lower than available fixed-rate alternatives.

 

On the surface, the decision may seem obvious.

 

Why lock in a higher rate when floating rates are still cheaper?

 

The answer lies in the uncertainty surrounding future interest rate movements.

 

Mortgage decisions should not be based solely on today’s rates. They should also consider where rates may be heading over the next two to three years.

 

While current floating rates remain attractive, we are seeing increasing volatility in daily SORA movements. Day-to-day fluctuations have become more noticeable compared to earlier periods, suggesting that the market is becoming less certain about the future interest rate outlook.

 

For borrowers who value certainty and predictability, this volatility can be uncomfortable.

 

A slightly higher fixed rate today may ultimately provide greater peace of mind if floating rates increase significantly in the future.

Why Are Banks Increasing Fixed Rates?

Many borrowers assume that mortgage rates simply follow central bank decisions.

 

In reality, banks price mortgage packages based on a combination of factors including funding costs, future interest rate expectations, market competition, economic risks, and geopolitical developments.

 

One of the biggest factors influencing current market sentiment is the ongoing conflict between the United States and Iran.

 

While the conflict itself may seem geographically distant from Singapore, its economic implications can have far-reaching effects across global financial markets.

 

The primary concern revolves around energy prices.

 

The Middle East remains one of the world’s most important oil-producing regions. Any disruption to supply chains or transportation routes can create concerns about potential oil shortages.

 

Even the possibility of future supply disruptions can push oil prices higher as markets attempt to price in the risk.

 

When oil prices increase, the effects are felt across the global economy.

 

Transportation becomes more expensive. Manufacturing costs increase. Businesses face higher operating expenses. Consumers eventually pay more for goods and services.

 

In simple terms, higher oil prices often contribute to higher inflation.

Why Inflation Matters for Interest Rates

Understanding inflation is critical when discussing mortgage rates.

 

Inflation refers to the general increase in prices across an economy over time.

 

When inflation rises too quickly, purchasing power declines. Everyday goods and services become more expensive, making life costlier for households and businesses.

 

Central banks are tasked with maintaining price stability.

 

One of the primary tools available to central banks is interest rate policy.

 

When inflation becomes too high, central banks may raise interest rates to slow economic activity.

 

Higher interest rates make borrowing more expensive.

 

Home loans become costlier.

 

Business loans become more expensive.

 

Consumers may reduce spending.

 

Companies may postpone investments.

 

As overall spending decreases, demand begins to cool, helping to reduce inflationary pressures.

 

This is why inflation and interest rates are closely linked.

 

If inflation remains elevated due to rising energy prices or geopolitical disruptions, central banks may be forced to maintain higher interest rates for longer than originally expected.

 

This is one of the reasons why financial markets have become more cautious in recent months.

What About the US Federal Reserve?

Many borrowers are closely watching the US Federal Reserve because its decisions influence financial markets around the world.

 

Earlier this year, market expectations pointed towards multiple US interest rate cuts during 2026.

 

However, the recent inflation concerns arising from geopolitical tensions have created uncertainty.

 

If inflation begins rising again, the Federal Reserve may delay future rate cuts.

 

In some scenarios, policymakers may even choose to maintain higher rates for longer than markets currently expect.

 

Banks are aware of these risks.

 

As a result, lenders may be adjusting mortgage pricing today in anticipation of future uncertainty rather than waiting for official policy changes to occur.

 

This helps explain why fixed mortgage rates have started increasing despite expectations for lower rates earlier in the year.

Why Are Singapore Mortgage Rates Affected?

A common misconception is that Singapore simply follows US interest rate movements.

 

The reality is more nuanced.

 

Unlike many countries, Singapore does not use interest rates as its primary monetary policy tool.

 

Instead, the Monetary Authority of Singapore (MAS) manages monetary policy mainly through the exchange rate of the Singapore dollar.

 

However, this does not mean Singapore is isolated from global interest rate trends.

 

Singapore is one of the world’s leading financial centres and remains highly integrated with international capital markets.

 

Banks operating in Singapore obtain funding from global markets and compete for deposits within an international financial system.

 

Consequently, developments in global interest rates inevitably influence local mortgage pricing.

Singapore’s Status as a Safe Haven

Another important factor supporting Singapore’s financial system is its reputation as a safe-haven destination.

 

During periods of global uncertainty, investors often seek countries with strong institutions, political stability, transparent regulations, and reliable currencies.

 

Singapore consistently ranks highly in all these areas.

 

The Singapore dollar remains one of Asia’s strongest and most stable currencies.

 

The country maintains substantial foreign reserves, prudent fiscal policies, and a well-regulated banking sector.

 

These strengths continue to attract foreign capital from investors seeking stability during uncertain times.

 

However, there is also a balancing act involved.

 

If Singapore’s interest rates become significantly lower than competing financial centres, some investors may choose to allocate their funds elsewhere in search of higher returns.

 

Capital can move quickly between global financial centres such as Hong Kong, London, New York, and other regional markets.

 

Banks therefore need to remain competitive when attracting deposits and funding.

 

This is one reason why we may be seeing a gradual upward adjustment in mortgage rates despite expectations for lower global rates.

What Are Homeowners Doing Right Now?

Over the past few weeks, we have observed a noticeable shift in borrower behaviour.

 

Many homeowners who were previously comfortable remaining on floating-rate packages are now reconsidering their options. The primary concern is not necessarily today’s interest rate.

 

Rather, it is the uncertainty surrounding where rates may be six, twelve, or twenty-four months from now.

 

As a result, we are seeing an increasing number of clients opting to secure fixed-rate packages while rates remain relatively attractive.

 

The most popular choice currently appears to be the 2-year fixed-rate package.

 

For many borrowers, two years provides a reasonable balance between rate certainty and flexibility. It allows homeowners to lock in their monthly repayments while avoiding excessively long commitment periods.

Should You Consider a 3-Year Fixed Rate?

For more risk-averse borrowers, a 3-year fixed-rate package may be worth considering.

 

The main advantage is greater certainty.

 

Homeowners know exactly what their monthly repayments will be for a longer period, regardless of future market developments.

 

This can be particularly appealing for borrowers with larger loan amounts or those who prefer predictable financial planning.

 

The trade-off is that 3-year fixed rates are generally higher than 2-year fixed rates.

 

Borrowers effectively pay a premium for the additional certainty.

 

Whether this premium is worthwhile depends largely on individual risk tolerance and expectations regarding future interest rate movements.

 

Our View for the Rest of 2026

While nobody can predict interest rates with complete certainty, the market environment has clearly become more complex than it was earlier this year.

 

The expectation of straightforward and continuous rate cuts is no longer as clear as before.

 

Geopolitical tensions, inflation risks, energy prices, and shifting central bank expectations are all contributing to a more uncertain outlook.

 

As a result, we believe borrowers should focus less on trying to perfectly time the market and more on choosing a package that aligns with their financial goals and risk appetite.

 

For homeowners whose mortgage packages are expiring within the next six to twelve months, now is a good time to start reviewing available options.

 

Waiting may still work out favourably, but there is also the possibility that fixed rates continue moving higher if market conditions deteriorate further.

Final Thoughts

The mortgage market has entered a new phase.

 

After a prolonged period of declining rates, we are now seeing local and foreign banks gradually increase fixed-rate offerings. Local banks have already adjusted rates upwards, and foreign banks have followed with increases of approximately 15 basis points. While floating-rate packages remain cheaper today, increasing SORA volatility and growing uncertainty surrounding global interest rates are causing many homeowners to reconsider their strategy.

 

For borrowers seeking stability and peace of mind, locking in a 2-year fixed-rate package may be a sensible option at current levels. More conservative borrowers may prefer a 3-year fixed-rate package despite the higher cost.

 

Ultimately, the right mortgage package depends on your loan size, remaining tenure, refinancing objectives, and risk tolerance.

 

As always, homeowners should review their mortgage options early rather than waiting until the last minute. In a rising-rate environment, today’s rates may not necessarily be available tomorrow.

 

Do check out Singapore’s latest rates here. We compare rates for you for free.