Singapore mortgage rates are moving higher again as we enter October 2026.

 

After falling substantially from the highs seen in 2023 and 2024, the interest-rate environment appears to have reached another turning point. SORA has begun moving upwards, Singapore banks have progressively revised their fixed-rate packages, and the US Federal Reserve has delivered its first rate hike since 2023.

 

For homeowners who have been waiting for mortgage rates to fall further, the outlook today is very different from what we saw earlier in 2026.

 

At Fairloan Mortgage Advisory, our view remains that borrowers should not simply look for the lowest advertised rate today. The more important question is: where are interest rates likely to be over the next two to three years, and which package gives you the best balance between cost, certainty and flexibility?

 

SORA Is Moving Higher Again

The first important development is SORA.

SORA, or the Singapore Overnight Rate Average, is the volume-weighted average rate of unsecured overnight borrowing transactions in Singapore’s interbank market. MAS publishes the daily SORA as well as the 1-month and 3-monthcompounded SORA benchmarks.

 

As of 30 September 2026, the published figures were approximately:

Benchmark	Rate
Daily SORA	1.39%
1-Month Compounded SORA	1.25%
3-Month Compounded SORA	1.23%

 

The daily rate can be volatile from one day to another, so we would not read too much into a single day’s movement. What matters for homeowners is whether daily SORA remains consistently higher over the coming weeks.

 

If daily SORA remains around the 1.30% to 1.50% region, both the 1-month and 3-month compounded SORA will gradually move upwards as well.

 

How Do 1-Month and 3-Month SORA Actually Work?

This is an important point because there is often some confusion.

The 1-month compounded SORA is calculated using daily SORA observations over approximately the previous month.

 

The 3-month compounded SORA uses daily observations over approximately the previous three months.

 

In other words, they are backward-looking averages.

 

This means that if daily SORA rises to 1.30%, the 1-month and 3-month benchmarks do not immediately become 1.30%.

 

Instead, the higher daily readings gradually replace older, lower readings in the calculation.

 

The 1-month SORA generally reacts faster because its averaging period is shorter. The 3-month SORA takes longer to adjust because three months of historical data are included.

 

Therefore, if daily SORA remains elevated through October and November, we expect upward pressure on both the 1-month and 3-month compounded benchmarks.

Floating Mortgage Rates Could Move Towards 1.50%–1.70%

Most competitive floating-rate mortgage packages are structured as:

1M or 3M Compounded SORA + Bank Spread

 

For example, assuming compounded SORA moves towards approximately 1.30%, a bank spread of around 0.20% to 0.40% would translate into an all-in mortgage rate of approximately:

1.50% to 1.70% p.a.

 

And this is the key risk with floating packages.

 

If SORA continues moving higher, your mortgage interest rate moves higher with it.

 

A 1.30% SORA plus a 0.30% spread gives you 1.60%.

 

But if SORA subsequently reaches 1.50%, the same package becomes 1.80%.

 

There is nothing wrong with choosing a floating rate. Floating packages can still make sense for borrowers who value flexibility, intend to sell their property, want to make substantial partial repayments or strongly believe rates will fall.

 

However, borrowers should understand that the 1.50%–1.70% range is not necessarily a floor.

 

It depends heavily on where SORA moves next.

 

Fixed Home Loan Rates Are Rising Too

Fixed rates are also seeing their fair share of increases.

 

Even before the September Federal Reserve meeting, some Singapore banks had already increased fixed home loan rates by approximately 10 to 25 basis points in anticipation of higher rates.

 

This makes sense from the banks’ perspective.

 

Banks do not price a two-year or three-year fixed mortgage simply based on today’s SORA.

 

They also consider wholesale funding costs, interest-rate swaps, expectations of future interest rates, the cost of hedging their exposure and competition between banks.

 

If the market increasingly expects interest rates to remain elevated, the cost of providing borrowers with a guaranteed fixed rate also increases.

 

That pressure eventually gets reflected in mortgage pricing.

 

Based on packages currently available through Fairloan, we are seeing some two-year fixed rates around the 1.8% to 1.85% region for larger loan sizes, while certain packages for smaller loan amounts are already approaching the 2% mark.

 

There may still be selected promotional packages below these levels, depending on the bank, property type, loan amount and borrower profile. Mortgage packages can also change extremely quickly.

 

The broader direction, however, is clear: the ultra-low fixed-rate window seen earlier in 2026 has narrowed considerably.

 

Why Are Interest Rates Increasing Again?

The biggest change came from the United States.

 

On 16 September 2026, the US Federal Reserve raised its target federal funds rate by 25 basis points, bringing the target range to 3.75% to 4.00%. It was the Fed’s first rate increase since 2023.

 

Earlier in the year, many investors expected the Federal Reserve to remain on hold or eventually continue reducing interest rates.

Persistent inflation changed that outlook.

 

US headline CPI inflation stood at 3.4% year-on-year in August 2026, while energy prices were up 16.3% year-on-year.

 

The Federal Reserve’s own September projections also placed 2026 PCE inflation at a median 3.7%, substantially above its long-term 2% objective.

 

Why Can’t the Fed Simply Ignore Higher Inflation?

Because persistent inflation causes economic problems of its own.

 

When prices rise significantly faster than wages, consumers lose purchasing power.

 

Households can afford fewer goods and services with the same amount of income.

 

Businesses face higher raw-material, energy, transport and labour costs. Those costs can either be passed to consumers through higher prices or absorbed through lower profit margins.

 

Persistent inflation also makes long-term planning more difficult and can destabilise expectations about future prices.

 

If inflation becomes entrenched, a central bank may eventually be forced to raise rates even more aggressively.

 

Higher interest rates then increase borrowing costs for households and companies, reduce investment and consumption, and can eventually contribute to slower economic growth or rising unemployment.

 

Therefore, the Federal Reserve is attempting to prevent inflation from becoming persistent even though higher interest rates themselves carry economic costs.

 

Is This a One-Off Fed Hike? Or the Beginning of Another Tightening Phase?

This is perhaps the most important question for mortgage borrowers.

 

At this stage, we would not assume that September’s 25-basis-point increase will be a one-off event.

 

Following the September meeting, 16 of the 18 Federal Reserve policymakers projected that interest rates would end 2026 above the level prevailing immediately after the September hike, implying that most participants expected at least one further increase.

 

The median Federal Reserve projection places the federal funds rate at approximately:

4.1% at end-2026
4.1% at end-2027
3.9% at end-2028
3.6% at end-2029

 

This is slightly different from saying the Fed will definitely hike another one or two times in 2027.

 

Based on the September projections, the stronger message is:

Rates could remain higher for longer.

 

The Fed currently appears to be signalling approximately one further 25-basis-point move by the end of 2026, followed by an extended period of restrictive rates through much of 2027 if inflation remains persistent.

 

Of course, Federal Reserve projections are not guaranteed. Monetary policy can change quickly if inflation falls sharply, economic growth weakens or geopolitical conditions improve.

 

Why Fairloan Has Been Cautious About Floating Rates Since March 2026

At Fairloan Mortgage Advisory, we have been highlighting inflation risks to our clients since March 2026.

 

The US-Iran conflict escalated following US-Israeli strikes on Iran at the end of February. The conflict subsequently disrupted energy infrastructure and shipping through the Middle East, including the Strait of Hormuz, one of the world’s most important energy transit routes.

 

Our concern was straightforward:

Higher oil prices → higher transport and production costs → stronger inflationary pressure → less room for central banks to cut interest rates.

 

That risk has unfortunately continued.

 

As of 30 September, Brent crude remained above US$100 per barrel amid continued tensions and tight fuel markets.

 

This energy shock has been one of the reasons inflation has remained more difficult to control.

 

Since March, we have generally advised suitable clients to consider locking in competitive fixed rates for two to three years rather than aggressively betting on further rate cuts.

 

Approximately 90% of our clients during this period chose to lock in fixed-rate packages as advised by us.

 

For these borrowers, their mortgage instalments will remain protected from SORA movements throughout their fixed-rate period.

 

What Do We Expect for Singapore Mortgage Rates in 2027 and 2028?

Our base case today is that the impact of higher global interest rates should become increasingly visible through 2027.

 

We do not expect Singapore interest rates to follow every Federal Reserve move one-for-one.

 

Singapore has its own liquidity conditions, currency dynamics and banking environment, and SORA is based on actual transactions in Singapore’s interbank market. A 25-basis-point Fed move therefore does not automatically mean a 25-basis-point increase in SORA.

 

Nevertheless, sustained higher US rates generally create upward pressure on global funding costs.

 

We therefore expect the mortgage environment to remain relatively firm through much of 2027, particularly if inflation remains elevated.

 

Our current expectation is that the environment may become more favourable from around 2028 onwards, assuming inflation gradually normalises.

 

Interestingly, this broadly corresponds with the Federal Reserve’s latest projections, which show the median policy rate remaining at about 4.1% through 2027 before easing towards 3.9% in 2028 and 3.6% in 2029.

 

This does not mean mortgage rates will suddenly fall in January 2028.

 

Rather, our view is that 2028 to 2029 could provide a more favourable refinancing window than late 2026 or 2027 if inflation continues moving towards central-bank targets.

 

Fixed or Floating Home Loan in October 2026?

This brings us to the most common question we are receiving now:

Should I choose fixed or floating?

 

There is no universally correct answer because the right package depends on the borrower’s loan size, cash flow, plans for the property, partial-prepayment intentions and risk tolerance.

 

However, based on our current interest-rate outlook, we see the following considerations.

 

Two-Year Fixed Rate: Our Current Sweet Spot

If choosing a fixed rate in October or November 2026, our preference currently leans towards a two-year fixed-rate package where the pricing is competitive.

 

The objective is straightforward.

 

A two-year fixed period covers most of 2027 and takes the borrower towards late 2028 or early 2029 before the next major mortgage review.

 

If our view is correct and global interest rates begin easing from around 2028 onwards, the borrower would then have an opportunity to refinance or reprice into a potentially more favourable rate environment.

 

At the same time, two years is not excessively long if the interest-rate outlook changes faster than expected.

 

One-Year Fixed + Second Year Floating

We are currently more cautious about packages structured as:

Year 1: Fixed rate
Year 2: Floating rate

The main concern is timing.

 

A borrower taking such a package in late 2026 may move onto floating rates around late 2027.

 

Based on the current Federal Reserve projections, we are not sufficiently confident that interest rates will have fallen materially by then.

 

Therefore, the second-year floating rate could end up being higher than expected.

 

Some of these packages include a free conversion after the first year, but the actual value of that feature depends on what rates are available at that point.

 

A free conversion does not automatically mean a low rate.

 

If prevailing fixed rates remain elevated in late 2027, the borrower may simply be converting into another relatively expensive package.

 

The exception would be borrowers who specifically value flexibility. For example, someone intending to make a substantial partial repayment, potentially up to 50% of the outstanding loan where the package allows it.

 

For these clients, the flexibility may be worth paying for.

 

What About a Three-Year Fixed Rate?

Three-year fixed rates can provide even greater certainty.

 

However, many three-year packages are currently priced around 20 to 50 basis points above comparable two-year fixed packages, with some approaching approximately 2.0% to 2.5%.

 

If our base case is that the rate environment begins improving from 2028 onwards, paying an additional premium today to remain fixed for an extra year may not necessarily provide the best value.

 

For borrowers who prioritise absolute payment certainty and do not intend to sell, refinance or make large repayments, a three-year fixed rate can still be reasonable.

 

But purely from a pricing-versus-duration perspective, we currently see the two-year fixed period as the more attractive middle ground.

 

Our View for October–November 2026

The mortgage environment has changed significantly over the past few months.

 

Earlier in 2026, the debate was largely about how low Singapore mortgage rates could go.

 

Today, the more relevant question is how high SORA and fixed rates could move if inflation remains persistent.

 

Daily SORA has moved above the longer-term compounded benchmarks. If those higher daily readings persist, both 1-month and 3-month SORA should gradually move higher.

 

Floating mortgage packages could therefore move towards the 1.50%–1.70% range or beyond, depending on the bank spread and future SORA movements.

 

Fixed rates are also repricing upwards as banks adjust to higher expected funding costs and a higher-for-longer global rate outlook.

 

For borrowers considering a mortgage between October and November 2026, our current preference is therefore:

Two-year fixed rate where the loan profile and package conditions are suitable.

 

It provides protection during what we expect to be the more uncertain 2027 interest-rate environment without locking borrowers in for too long should rates begin easing through 2028 and 2029.

 

That said, mortgage decisions should never be made based on the headline interest rate alone.

 

Lock-in periods, partial-payment conditions, sale waivers, legal subsidies, clawback clauses, free-conversion features and the eventual rate after the promotional period can materially change which package is actually better.

 

At Fairloan Mortgage Advisory, we compare mortgage packages across banks and analyse not only today’s rate, but how the package could perform under different interest-rate scenarios over the next two to three years.

 

If your existing home loan is approaching the end of its lock-in period, or you are purchasing a new property, speak with us for a detailed mortgage-rate comparison before deciding between fixed and floating.

 

Do check out the latest and lowest Singapore Home Loan Rates here

 

Mortgage rates mentioned in this article are accurate as of writing and may change without notice. Actual packages depend on loan size, property type, borrower profile and individual bank approval.