Interest rates have taken centre stage again this year. After the US Federal Reserve delivered another rate cut in October 2025, expectations are building for one final trim in December. Markets now anticipate a gentle easing path into 2026,  a stark contrast to the intense hikes seen from 2022 to early 2024.

Here at home, overnight funding conditions remain surprisingly benign. 1-month SORA stands around 1.23% and 3-month SORA at 1.32% as of 31 November 2025, even as the Fed funds rate remains significantly higher. This divergence continues to underscore a theme we have emphasised at Fairloan: Singapore’s interest-rate environment reacts to global policy, but not mechanically. Liquidity conditions, MAS currency policy and local market behaviour matter just as much.

As a result, Singapore homeowners currently enjoy some of the most favourable mortgage levels seen in recent years. The lowest available fixed-rate packages range around 1.43%–1.50%, while floating effective rates are broadly in the 1-50 – 1.55% range ( likely to drift lower if easing continues in 2026.) 

This naturally raises the question: should borrowers choose floating SORA or lock in fixed rates today?

The answer lies not in chasing the lowest headline number, but in positioning for the next two years of the rate cycle.

A Window of Stability, With a Turn Ahead

Our base view is that 2026 will remain mostly stable on the rate front. With the Fed signalling a soft glide path lower and inflation largely tamed, local funding conditions should stay gentle. Whether one opts for floating SORA or a competitive short-term fixed rate, the difference in cost through 2026 is likely to be modest. In other words, this is a period where either choice is comfortable for borrowers.

But the more important strategic window lies beyond that.

By late-2026 into early-2027, uncertainty may return. Markets may begin shifting from a dovish posture to anticipating the next tightening cycle, especially if growth re-accelerates or labour markets tighten again. When policy turns, it often turns quickly, and spreads can widen before benchmark rates adjust.

This is why we believe homeowners should treat the coming 12–18 months (Now till Q2/2027) as a phase to enjoy current low rates, while preserving the flexibility to act before volatility returns.

Fairloan Balanced Strategy: 

Borrowers selecting floating SORA can reasonably expect to benefit from continued softness and potentially lower resets in 2026. For those comfortable with minor fluctuations and who maintain prudent cash buffers, this remains an attractive path.

Similarly, a short-duration fixed rate in the 1.4% range offers peace of mind at a historically low cost, especially for conservative clients or households who prioritise certainty over incremental savings.

The most critical decision point will not be today, but rather the end of 2026 into early 2027. This is when homeowners should assess their exposure and consider locking in a 3- to 5-year fixed rate, securing long-term stability before any potential spike in volatility.

In short, this is a moment to enjoy flexibility, not to gamble. Whether floating or fixed today, the advantage lies in staying close to the market and being prepared to commit longer-term once the next cycle becomes clearer.

Our November 2025 Takeaway

Rates are low, spreads remain tight, and the next year promises stability more than surprise. For homeowners, the opportunity is two-fold: benefit from the calm now, and prepare to lock in security before markets awaken again.

Choose either floating SORA or a sharp fixed today, both are sensible. What matters most is your ability to pivot decisively at the end of 2026 or early 2027, when conditions may shift.

At Fairloan, we see this period as a gift. Few rate environments allow homeowners to enjoy low costs now and plan ahead for stability. This is one of them.