With growth in Singapore slowing and inflation moderating, the key question now becomes: Should homeowners opt for Fixed‑rate stability or Floating‑rate flexibility?

1.  Singapore Outlook: Growth & Inflation (2025)

• A June MAS survey revealed economists cut their forecast for Singapore’s 2025 GDP growth to 1.7 %, down from 2.6 %. Core inflation is projected at 0.8 %, headline at 0.9 %.
• MAS has already eased monetary policy in January and April 2025, slowing the pace of SGD appreciation rather than cutting rates directly.
• Recent MAS policy statements show a pause as Q2 growth surprised on the upside (1.4 % q‑o‑q), but uncertainties persist around geopolitical trade tensions.

Implications: With weak inflation and slower growth, MAS may remain cautious, but further modest easing is possible in H2 2025 if the outlook remains soft.

2.  US Monetary Outlook & the Fed’s Dot Plot

• At its June 2025 meeting, the Fed kept rates steady at 4.25–4.50 %, citing persistent inflation pressures from tariffs and a still-healthy labour market, though dissent grew from Fed officials urging cuts.
• The Fed’s Summary of Economic Projections (SEP) indicates a median of two 25‑bp rate cuts in 2025, bringing the Fed funds midpoint to around 3.75–4.0 %, with another two cuts in 2026, and a long‑run neutral rate near 3 %
• The dot‑plot shows division among members: about half expect cuts this year; others see no change. The consensus supports gradual and data‑driven easing rather than aggressive cuts.

Implications: Because US rates influence Singapore interbank market liquidity, SORA may soften over time, but only gradually and in response to a confirmed inflation downtrend.

3.  Singapore Rates Snapshot (August 2025)

• 3‑month compounded SORA sits at approximately 1.82 % as of 1 Aug 2025, within a broader 1.7–1.9 % range.
• Current floating mortgage rate offer: 3M SORA + 0.35 %, so effective interest ≈ 2.17 %.
• Lowest fixed rate offers in market: 1.90 % for 1‑year fixed packages (often with loan size conditions, e.g. >S$600K)

4. Historical & Future Rate Trends

History:

• Between 2022 and early 2023, SORA soared from near zero to above 3 % as global rates rose.
• Since mid‑2024, SORA began contracting slowly as global inflation cooled and rate hike cycles peaked.

Forward Outlook:

• The MAS survey signals further mild easing of exchange‑rate slope in H2 2025, keeping inflation under control.
• Fed projections imply gradual Fed cuts, which could reduce interbank SGD liquidity rates (hence SORA) by end‑2025 or early 2026

Conclusion: If global disinflation continues and MAS holds policy, floating rates may edge lower, narrowing the gap with fixed rates.

5.  Fixed vs Floating: What’s Best for You?

When Fixed (1.90 %) may be better:

• You prefer certainty about repayment amounts over the next year.
• You expect floating rates to stay elevated or even rise again if US inflation reignites.
• You value protection from volatility, especially if you have a tight budget.

When Floating (3M SORA + 0.35 %) may suit:

• You’re comfortable with some rate fluctuation and likely to benefit if SORA declines.
• You plan to refinance or repay early within 1-2 years, avoiding fixed rate lock‑ins.
• You have slack in servicing capacity, so small rate upticks would be manageable.

Risk Appetite Considerations:

• Conservative: Lock in with fixed. Even if floating dips, the premium paid (~0.2‑0.3 %) is insurance.
• Moderate: Floating offers upside if rates fall, but have contingency funds in case of small increases.
• Aggressive: Can consider hybrid: e.g. mix fixed for part of loan, floating for remainder, rebalance periodically.

6.  End‑Loan Term Planning

• Most one-year fixed packages come with lock-in (e.g. 1 year) and a conversion fee.
• If you foresee significant life changes (job relocation, sale, refinancing), floating can offer flexibility.
• Post‑fixed‑period, you can switch to floating or another fixed package (with conversion option).

7.  Final Advice: Consult a Fairloan Mortgage Advisor

While this overview offers analysis, individual circumstances matter. That’s where Fairloan mortgage advisors can add real value:

• We assess your loan quantum, property type, payment capacity, and future plans.
• We can run scenario comparison: interest cost over time under different rate paths.
• We help structure hybrid loans and monitor opportunities for switching at lower cost.

Your advisor can tailor the following:

• Whether to fix for 1 yr, 2 yrs, or on a hybrid structure.
• How many years of buffer you need to survive a 0.5 % or 1 % uptick.
• Whether to lock bite vs maintain flexibility.

Next Steps

1. Contact a Fairloan advisor, share:
   • Your loan amount, tenure, property type.
   • Your likely timeline (purchase vs refinance vs repayment horizon).
   • Your tolerance for monthly payment changes.
2. Ask for:
   • A comparison of fixed vs floating costs over 1–5 years under different SORA paths.
   • A hybrid structure recommendation if suitable.
3. Review terms:
   • Lock-in duration and early-exit penalties.
   • Conversion flexibility.

With expert advice and clarity on cost‑and‑risk tradeoffs, you’ll be empowered to choose, not just between fixed and floating, but the strategy that’s uniquely right for your situation.