The usual rule for choosing a home loan goes like this: a fixed rate costs a little more, and you pay that premium for certainty. Dollars and Sense set out the case for each side this week, and the rule held for most of the last decade. This week it does not.
On Roov's rate table, the cheapest fixed package for a $1 million loan on a completed home is priced below the cheapest floating one.
What the banks are offering
Roov's table holds 30 live packages from six banks for a loan of that size on a completed property. Priced on 3-month SORA of 1.2251 per cent, as published on 24 September:
Floating: 10 packages, first-year rates from 1.43 per cent to 1.58 per cent. Fixed: 19 packages, first-year rates from 1.40 per cent to 2.00 per cent. One hybrid, at 1.49 per cent.
So the cheapest end of the two overlaps almost exactly. Certainty, for the moment, costs nothing.
The number that actually decides it
First-year rates are what packages are sold on, and they are the least useful figure on the sheet. What matters is what happens after the lock-in.
A fixed package turns floating when its fixed period ends, usually at SORA plus a spread. A floating package often changes too: one of the cheapest floating packages on our table is 1.43 per cent in years one and two, and 2.23 per cent in year three at today's SORA, because its spread steps up once the lock-in expires. Another stays at 1.43 per cent throughout. The first-year rate is identical; the three-year cost is not.
Compare packages on their average over the years you expect to hold the loan, not their opening rate. Roov's package fit tool does that across every package on the table, and our guide to home loan rates explains how SORA, spreads and lock-ins fit together.
In dollars
On an $800,000 loan over 25 years:
At 1.40 per cent, the monthly instalment is about $3,162. At 1.60 per cent, about $3,237. At 2.40 per cent, about $3,549. At 4.00 per cent, about $4,223.
Each 0.2 of a percentage point is roughly $75 a month on this loan. The gap between today's best rate and the 4 per cent many borrowers paid in 2023 is over $1,000 a month.
When fixed makes sense now
If fixed costs no more than floating, the case for fixing is simply insurance you are not paying for. SORA does not stay still: Dollars and Sense notes 3-month SORA rose from 0.20 per cent to 3.14 per cent in 2022 alone, and peaked at 3.76 per cent in 2023. We wrote last week about what the Fed's rate rise could mean for a Singapore mortgage.
When floating still makes sense
If you expect to sell or refinance within a year or two, the lock-in matters more than the rate type. A package with no lock-in, or the shortest one, keeps your options open; breaking a lock-in costs a penalty, and a cash rebate taken with the loan is clawed back if you refinance or sell within three years, at every bank.
What this does not change
Neither rate changes how much you can borrow. Banks test your eligibility at a stress rate set by MAS, not at the package rate, so a cheaper mortgage lowers your instalment but not your loan limit. We explained why in "wait for rates to drop and you'll qualify for more", and our guide to how much you can borrow walks through the test. The affordability calculator runs it on your numbers.
Rates move weekly, and the table moves with them. Roov's rates tool shows what is on offer at your loan size, with the three-year cost of each package beside its opening rate.
Want it done for you? Roov's agent will compare every package on the table against your own loan, lock-in plans and timeline, and tell you which one fits, fixed or floating. Get in touch and send your loan amount and when you bought.