Buying a home is one of the biggest financial decisions Singaporeans make, and choosing the right home loan is just as important as choosing the property itself. With interest rates stabilising in 2026, SORA peaking and easing, and fixed packages reaching one of the lowest points in recent years, new buyers are entering a landscape very different from the turbulence of 2022–2023.

The old question of “Which bank has the best home loan?” now has a more nuanced answer: it depends not just on the headline rate but on your income stability, long-term plans, risk appetite, and whether you prefer fixed certainty or floating flexibility.

This 2026 guide breaks down everything first-time buyers need to know, from SORA forecasts and bank promotional packages to HDB loan comparisons, lock-in conditions and real-world scenarios. Whether you’re applying for a BTO, purchasing a resale flat, or buying a private property, this guide helps you confidently choose the best home loan for your situation.

The 2026 Interest Rate Outlook: What New Buyers Should Expect

To understand which home loan is “best,” we first need to understand where rates are heading in 2026. After the US Federal Reserve delivered another rate cut in December 2025, widely seen as the final cut of the cycle, global interest rates have settled into a pattern of slow normalisation rather than steep declines.

Economists expect at most one moderate cut in late 2026, but not the kind of aggressive easing seen during past recessions. Inflation in the US, Europe and Asia has cooled noticeably, while economic growth remains modest, with slight increases in unemployment in several regions, including Singapore.

Against this backdrop, SORA (Singapore Overnight Rate Average) is expected to drift gently within the 1.0% – 1.5% range throughout most of 2026. This is a far cry from the volatility of 2022 and 2023, when mortgage rates surged above 4% and many homeowners experienced the highest monthly instalments of their lifetimes.

The stability of SORA today means that floating-rate packages are far less risky than before, though still subject to quarter-year adjustments.

Banks in Singapore, particularly DBS, OCBC and UOB, have responded to this stable environment with highly competitive packages. Fixed-rate home loans in 2026 start from 1.35% to 1.55% for a 2year lock-in, and around 1.78% for a five-year lock-in. These packages are significantly below the HDB concessionary rate of 2.6%, which has remained unchanged since the late 1990s. Because of this, most financially stable buyers in 2026 naturally gravitate toward bank loans.

This does not mean fixed rates are always better, floating SORA packages still appeal to buyers who want more flexibility or who believe rates may dip slightly later in the year. But the gap between fixed and floating has narrowed enough that choosing between them now rests on individual preference rather than on chasing the lowest initial rate.

Comparing HDB Loans and Bank Loans in 2026

New buyers must first decide whether to take an HDB loan or a bank loan. The difference is not only about interest rates, it affects downpayment requirements, monthly budgeting, refinancing options and long-term financial planning.

The HDB loan, pegged at 2.6%, offers unparalleled stability because the rate has not changed for more than two decades. It allows buyers less upfront cash and it is also more forgiving for those with fluctuating income, as HDB tends to offer greater payment flexibility during financial hardship. For young couples with limited savings, an HDB loan remains the safest and most predictable starting point.

However, the downside is obvious: at 2.6%, it is significantly more expensive than the bank rates available in 2026. Over a 25-year loan, the difference in interest paid can reach tens of thousands of dollars. More importantly, once you switch from an HDB loan to a bank loan in the future, you cannot switch back to HDB,  this makes the initial decision critical.

Bank loans, on the other hand, come with slightly more complexity but offer far more competitive rates. In 2026, the most attractive bank packages include:

• Three-year fixed rates between 1.50% and 1.55%
  
• Five-year fixed rates at around 1.78%
  
• Floating 3M SORA packages between 1.3% and 1.6% (Spread of 0.3-0.5%)
  
• FD-pegged packages like DBS FHR6, which offer stability similar to fixed deposits
  
  

The main advantage of a bank loan is the opportunity to refinance whenever rates become favourable. For example, if SORA unexpectedly falls in 2027 or 2028, borrowers can switch their home loan to enjoy the new lower rates.

The trade-off is that bank loans impose stricter approval conditions and enforce lock-in periods where breaking the loan, typically due to selling the flat early, incurs 1.5% penalties.

Should You Choose Fixed or Floating Rates in 2026?

The next major decision is selecting fixed or floating rates. The 2026 environment presents one of the most balanced choices in years, because both fixed and floating packages are priced close to each other. The decision comes down to your personal comfort level with interest rate fluctuations and how long you expect to stay in your property.

Fixed rates offer peace of mind. Whether you choose a 2year, 3year or 5year fixed package, your monthly instalment remains unchanged for the lock-in period. This is a huge advantage for young families planning budgets, buyers who dislike unpredictability, or homeowners who remember the volatile spikes in 2022–2023 when instalments jumped almost overnight. With fixed rates in 2026 at only 1.35% to 1.78%, many borrowers see this as an opportunity to secure long-term stability at historically low levels.

Floating SORA packages, however, allow borrowers to benefit if rates move slightly lower. While SORA is expected to remain in the 1.0% to 1.5% range, small dips of 0.05 to 0.15% can translate into meaningful savings over large loans. Floating loans also come with the flexibility of switching to a fixed rate once the initial 12-month period ends, many banks now offer free conversions after the first year.

Borrowers with strong financial buffers or those anticipating a refinancing opportunity often choose floating rates to “ride the wave” in 2026 before locking in a fixed rate later. This hybrid approach, starting floating, then converting, has grown increasingly popular, especially because the difference between fixed and floating is much narrower than in past years.

Ultimately, if your budget is tight, or if you’re a first-time buyer who prefers stability, fixed rates are the safer choice. But if you can tolerate small fluctuations and want the potential of future savings, floating rates remain viable.

Best Home Loan Packages in Singapore (2026 Overview)

There is no single “best” home loan for everyone, but certain packages consistently stand out for offering the strongest combination of low rates, flexibility and stable lock-ins. The following overview reflects the typical offerings from major banks:

HDB Three-year fixed rates (1.50%–1.55%)
These are prime options for BTO buyers collecting keys in 2026 and for resale buyers who expect to hold their property for at least three years. They strike a good balance between long-term savings and manageable commitment.

HDB Five-year fixed rates (1.78%)
Offered by DBS, UOB and OCBC, these longer lock-ins are ideal for homeowners who want extended stability — especially useful for new parents or buyers planning to stay put for many years.

Floating 3M SORA packages (1.3%–1.6%)These packages appeal to borrowers who believe rates may soften further. They also offer flexibility for future refinancing.

FD-pegged packages like DBS FHR6
These are suitable for buyers who want a floating option that behaves more predictably. FD-pegged rates generally move slower than SORA and are less sensitive to global economic shifts.

Hybrid loans

These are the ideal packages at the moment, as client is able to adjust their rates during locked in period (after 12months into loan), ensuring their rates are competitive.

New buyers should note that banks also factor in your income type, CPF usage, credit history and TDSR/MSR limits, meaning the best loan is not necessarily the cheapest one on paper but the one your profile qualifies for most comfortably.

How to Choose the Best Home Loan for Your Situation

There are several key considerations that determine which home loan structure will suit your needs best.

First, consider how long you plan to stay in the property. If you aim to upgrade within three to five years, a shorter fixed rate or floating package makes more sense. If this is your long-term home, a five-year fixed rate may offer the best peace of mind.

Next, assess your financial buffer and risk appetite. If your income is variable, commission-based, or self-employed, fixed rates are generally safer because they ignore market movements. If you are financially stable and comfortable monitoring the market every quarter, floating rates offer potential upside.

Also consider the flexibility you may need in the future. Bank loans generally offer more refinancing opportunities, but breaking a lock-in early can be costly. If you anticipate life changes, marriage, children, job relocation, factor this into your loan selection.

Finally, remember that the “best” home loan is not just about the lowest rate. It’s about matching the loan type to your income pattern, the property you’re buying, your long-term goals and your personal tolerance for fluctuation.

This is where professional guidance makes a difference. Many homeowners end up overpaying because they choose a package based on headline rates alone, without considering the lock-ins, conversion options, or the bank’s behaviour with floating rate adjustments.

Fairloan’s Recommendation for New Buyers in 2026

Based on the 2026 outlook, new BTO and resale buyers will find strong value in the three-year fixed rate between 1.50% and 1.55%. It offers excellent stability, attractive affordability, and enough flexibility at the end of the lock-in to refinance if rates fall further.

Those who prefer a longer planning horizon, particularly families with stable long-term plans, may find the five-year fixed rate at 1.78% the most hassle-free choice. These rates are historically low and unlikely to return once global rates normalise.

Floating rates remain useful for buyers who feel comfortable with mild fluctuations. With SORA expected to hover around 1.20% to 1.40%, there is little downside risk. Floating packages also work well for buyers who foresee refinancing or who want to keep an eye on the market for further opportunities.

For buyers who remain undecided, hybrid loans provide a balanced middle ground. Many banks now offer flexible conversion options, some allow switching to fixed after 12 months at no cost, giving borrowers added confidence.

Ultimately, the best home loan in Singapore in 2026 depends on your personal financial strength, your long-term plans and how much stability you want in your monthly repayments. With today’s competitive offerings, buyers are in a favourable position to secure excellent deals.

Fairloan helps clients compare all leading banks, DBS, OCBC, UOB, HSBC, Maybank, CIMB and Standard Chartered, to identify the most suitable package. Whether you are buying your first home or collecting your BTO keys, we provide unbiased and transparent advisory to guide you through the entire process.

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