The first half of 2026 has been a roller coaster for global markets and interest rates. Just six months ago, many economists and homeowners expected the United States Federal Reserve to begin a series of rate cuts this year. The consensus at the end of 2025 was that inflation was easing, economic growth was slowing, and lower borrowing costs were likely on the horizon.

However, the outlook has changed significantly.

At its latest meeting, the US Federal Reserve decided to keep interest rates unchanged. More importantly, policymakers have indicated that inflation risks remain elevated, and the possibility of another rate hike later this year cannot be ruled out. The Federal Open Market Committee (FOMC) continues to adopt a cautious stance, preferring to keep interest rates higher for longer until inflation is firmly under control.

This shift in expectations has had a direct impact on mortgage rates globally, including here in Singapore.

For homeowners and buyers, the big question today is simple: Should you choose a fixed-rate home loan or a floating-rate package?

The answer is not straightforward because every borrower has different financial circumstances, risk tolerance and future plans.

Why Are Mortgage Rates Rising Again?

Mortgage rates in Singapore are heavily influenced by global interest rate movements, particularly those in the United States.

Although Singapore’s monetary policy differs from the US, local funding costs are closely linked to global liquidity conditions. When the US Federal Reserve keeps interest rates elevated, borrowing costs for banks also remain high.

The recent geopolitical tensions in the Middle East, particularly the conflict involving Iran, have also increased concerns about higher oil prices and persistent inflation.

If oil prices remain elevated for a prolonged period, inflation could become more entrenched globally. This may force central banks, including the US Federal Reserve, to maintain higher interest rates for longer than originally anticipated.

As a result, the aggressive rate cuts that many expected in 2025 now appear increasingly unlikely.

Local Banks Have Increased Their Fixed Rates

The changing outlook has already started to affect mortgage pricing in Singapore.

Over the past few months, several local banks have gradually increased their fixed-rate packages.

As of July 2026, some of the lowest fixed-rate packages available from local banks are:

• 2-Year Fixed Rate: approximately 1.60%
• 3-Year Fixed Rate: approximately 1.80% for loan sizes above $1 million.

Compared to earlier in the year, these rates are noticeably higher.

Banks are becoming increasingly cautious because the future path of interest rates remains uncertain. By increasing fixed rates, banks are protecting themselves against the possibility that funding costs may rise further.

For borrowers, this means the era of ultra-low fixed mortgage rates may slowly be coming to an end.

Floating Rates Remain Attractive

Despite the increase in fixed rates, floating-rate packages remain extremely competitive.

The lowest floating package currently available is around:

1-Month SORA + 0.20%

Based on today’s SORA levels, the effective interest rate is approximately:

1.25%.

This means floating rates remain lower than both two-year and three-year fixed packages.

For a loan of $1 million with a remaining tenure of 30 years, the difference in monthly repayments can be significant.

At an interest rate of 1.25%, the monthly instalment is approximately $3,330.

At an interest rate of 1.40%, the monthly instalment rises to approximately $3,400.

At an interest rate of 1.60%, the monthly instalment increases to approximately $3,500.

While the difference may not appear substantial initially, it can add up to several thousand dollars over the course of a few years.

This explains why many borrowers are still attracted to floating-rate packages despite the uncertainty surrounding future interest rates.

Foreign Banks Continue to Offer Competitive Fixed Rates

Interestingly, foreign banks have taken a different approach.

Several foreign banks have chosen to maintain highly competitive two-year fixed-rate packages at around:

1.40% to 1.45%.

At the moment, these banks are not actively promoting three-year fixed-rate packages and are instead focusing on shorter fixed periods.

This could indicate that they believe interest rates may eventually moderate over the next few years, making it unnecessary to lock borrowers into higher three-year fixed packages today.

For borrowers, these foreign bank packages have become increasingly attractive because they offer a balance between certainty and affordability.

The difference between a 1.40% fixed package and a 1.25% floating package is relatively small, but the fixed package provides peace of mind should interest rates rise unexpectedly.

So, Which Is Better?

Unfortunately, there is no one-size-fits-all answer.

The best home loan depends entirely on your financial circumstances and risk appetite.

Floating Rates May Be Suitable If…

You are comfortable with some uncertainty and have sufficient financial buffers.

A floating package may be suitable if:

• You have stable income.
• You have significant savings.
• You can comfortably absorb higher monthly repayments if interest rates rise.
• You believe interest rates will eventually decline over the next few years.

For example, if SORA were to increase by 1%, a borrower with a $1 million loan could see monthly repayments increase by several hundred dollars.

The question is not whether rates can rise.

The question is whether you can comfortably manage the increase if they do.

Why Many Borrowers Still Prefer Fixed Rates

Despite floating rates being cheaper today, many homeowners continue to choose fixed-rate packages.

At FairLoan Mortgage Advisory, we are increasingly seeing clients request for three-year fixed-rate packages because they prefer certainty over potential savings.

However, the majority of borrowers are still selecting two-year fixed packages.

In fact, close to 70% of our recent clients continue to choose two-year fixed rates.

There are several reasons for this.

Firstly, the difference in pricing between floating and fixed packages has narrowed significantly.

Secondly, many borrowers believe that interest rates could start easing again once geopolitical tensions improve and inflationary pressures subside.

Thirdly, a two-year fixed package provides certainty today while still allowing borrowers the flexibility to refinance or reprice relatively soon if rates become lower in the future.

For many homeowners, this has become the ideal balance between cost savings and peace of mind.

Should You Lock in a Three-Year Fixed Rate?

Three-year fixed packages have also gained popularity recently.

Borrowers who expect interest rates to remain elevated for a prolonged period may prefer to lock in certainty for a longer period.

This can be particularly useful for:

• Families with tight monthly budgets.
• Borrowers with large loan sizes.
• Homeowners who prefer predictability.
• Investors who want stable cash flow.

However, there is a trade-off.

Three-year fixed packages are generally more expensive.

If interest rates decline earlier than expected, borrowers who locked into a three-year package may miss out on lower rates.

This is why many borrowers still prefer two-year fixed packages despite the availability of longer fixed periods.

Interest Rates Are Only One Part of the Equation

Many borrowers focus entirely on finding the lowest interest rate.

However, choosing the right home loan involves much more than comparing headline rates.

Different banks offer different features and benefits.

Some banks offer:

• Full subsidy for refinancing legal fees.
• Free conversion options.
• Higher equity term loan limits.
• More flexible credit assessment.
• Better treatment for self-employed borrowers.
• Different approaches towards variable income.
• More favourable policies for borrowers with multiple properties.

A package that appears more expensive on paper may actually be more suitable for your circumstances.

For example, a borrower planning to upgrade in the next few years may value flexibility more than securing the absolute lowest interest rate.

Similarly, self-employed borrowers may have limited options and need to consider banks with more favourable credit policies.

Therefore, mortgage selection should never be based solely on the lowest advertised rate.

Looking Ahead: What Can We Expect for the Rest of 2026?

Predicting interest rates has never been easy.

At the beginning of the year, most economists expected multiple rate cuts in 2026.

Today, the outlook looks very different.

Inflation remains stubborn.

Geopolitical risks remain elevated.

Oil prices continue to be volatile.

As a result, mortgage rates may remain higher for longer than initially expected.

This does not necessarily mean rates will rise sharply from here, but borrowers should prepare for the possibility that the low-rate environment may not return as quickly as many had hoped.

Final Thoughts

The July 2026 mortgage market presents borrowers with both opportunities and challenges.

Floating rates remain the cheapest option today, with packages starting from around 1.25%.

Foreign banks continue to offer attractive two-year fixed rates of around 1.40% to 1.45%.

Meanwhile, local banks have increased fixed rates, with two-year fixed packages reaching approximately 1.60% and three-year fixed packages climbing as high as 1.80% for larger loan sizes.

So, which is better?

The answer depends on your financial situation, risk appetite and long-term plans.

If you are comfortable with uncertainty and can withstand potential increases in repayments, floating rates may offer meaningful savings.

If you value stability and peace of mind, a fixed-rate package may be more suitable.

Ultimately, there is no perfect home loan and no single package that suits everyone. The best mortgage solution is one that aligns with your financial goals, cash flow requirements and future plans.

As mortgage rates continue to evolve, it is increasingly important to compare packages carefully and understand the features offered by each bank before making a decision.

If you are unsure which package suits your needs, speak to an independent mortgage adviser.

At FairLoan Mortgage Advisory, we continuously monitor the market and compare the latest home loan packages across multiple banks to help homeowners and buyers make informed decisions. Reach out to us for the latest mortgage rates and personalised advice tailored to your situation.

Do check out the latest July 2026 mortgage home loan rates offered by banks here