The US Federal Reserve raised its benchmark rate by a quarter of a percentage point on 16 September, to between 3.75% and 4%, its first increase in three years, as energy prices from the Middle East conflict pushed inflation up. UOB's economists expect two more rises, in December and early 2027, The Straits Times reported. It is the same rate environment that has priced young Americans out of buying homes, as we looked at this week.
Singapore does not follow automatically
The Monetary Authority of Singapore manages the Singapore dollar against a basket of currencies rather than setting an interest rate, so a Fed hike does not become a Singapore hike overnight. MAS has tightened its currency policy twice this year, in April and July. Mortgages here are priced off SORA, which reflects what banks pay to borrow Singapore dollars overnight, and SORA follows global rates only loosely.
Roov's SORA records show the drift. Three-month compounded SORA started the year at 1.18%, dipped to 1.13% in early August, and stood at 1.21% on 17 September. One-month SORA is at 1.25%. Maybank's economist has raised his forecast for three-month SORA to 1.6% by the end of this year and 1.85% by the end of 2027, the Straits Times reported.
Floating or fixed, in dollars
Take an $800,000 loan over 25 years, and the cheapest packages on Roov's rates page this week. The cheapest floating package, DBS's three-month SORA plus 0.20% with no lock-in, works out to 1.41% today, or $3,166 a month. The cheapest two-year fixed rate for that loan size, from Standard Chartered, is 1.60%, or $3,237 a month. The certainty costs $71 a month.
The break-even is simple. Over its two years, the fixed package comes out ahead if three-month SORA averages more than 1.40%, about 0.19 of a percentage point above today. If SORA follows Maybank's forecast to 1.6% by December, the floating package would cost 1.80%, or $3,313 a month, $76 above the fixed one. At 1.85% SORA it would be $3,410. Forecasts miss often, and a floating loan with no lock-in can be switched to a fixed one later, but the direction of travel has changed.
The banks have noticed. In Maybank's rate sheet this week, its two-year fixed rate rose to 1.80% for loans of $800,000 and above, from 1.55% two weeks earlier, and to 1.95% below that, from 1.70%. Fixed rates tend to move before SORA does, because they price in where banks expect it to go.
What it does not change
Your loan limit. Banks size a mortgage against your income at the MAS stress-test floor, not at the rate on offer, so a rise in SORA does not shrink what you can borrow until market rates pass that floor, and they are nowhere near it. We explained why waiting for rates to fall does not raise your budget either. Our guide to how much you can borrow sets out the limits, and the affordability calculator runs them on your own income.
HDB loans. The HDB concessionary loan is pegged to the CPF Ordinary Account interest rate rather than to SORA, so the Fed's move does not reach it directly.
If you are refinancing
If your lock-in ends in the coming months, compare packages now rather than after the next move. Roov's rates page shows the cheapest package in each loan band from the banks' current sheets, and the package fit tool matches a package to how long you will hold the loan and how much rate risk you can carry. A cash rebate is clawed back if you refinance or sell within three years, so count that before switching. Our home loan rates guide explains how the packages are built.
As one fund manager told the Straits Times, it is too early to judge how far the Fed's move will reach Singapore's borrowing costs. A fixed rate is insurance against it, and this week that insurance costs $71 a month on an $800,000 loan.