More HDB flat owners switching to bank loans as rates drop to 3-year low

Owners spoilt for choice as banks compete to offer attractive refinancing options

- Grace Leong Senior Correspondent

With interest rates for home loans falling to their lowest in three years, and more competitive bank loan packages on the market, mortgage loan refinancing activity in Singapore has ratcheted up.

Since the start of 2025, more Housing Board flat owners in particular have made the switch to bank loans to save money as these have become significantly cheaper, local banks and mortgage brokers told The Sunday Times.

Mr Clive Chng, associate director at Redbrick Mortgage Advisory, said fixedand floating-rate bank loan packages have dropped to between 1.55 per cent and 1.8 per cent in the past six months. In comparison, the HDB concessionary loan rate is 2.6 per cent.

Lower interest rates have sparked interest from HDB flat owners who had taken higher fixed-rate bank packages in 2022 and 2023, and reached the end of their loan lock-in periods, said Mr Joel Lim, associate director at Dollarback Mortgage.

Floating-rate packages are typically pegged to the three-month compounded Singapore Overnight Rate Average, or Sora, which banks use to price home loan packages.

For most of 2023, the Sora rate exceeded 3.6 per cent, but in the past week, it has fallen to below 1.4 per cent. As at Oct 30, the three-month Sora was at around 1.34 per cent per annum - the lowest rate in more than three years. This could drop further if the US Federal Reserve continues to cut interest rates, local inflation stays low, and the Singapore dollar remains strong.