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Will Mortgage Rates in Singapore Go Down in 2024?

PropertyGuru Editorial Team
Will Mortgage Rates in Singapore Go Down in 2024?
Note: On 30 and 31 January, at the first meeting of 2024, the Federal Open Market Committee (FOMC) announced that interest rates should be steady at a range of 5.25% to 5.5%. Recently, the Association of Banks in Singapore (ABS) also came out reminding homeowners with Singapore Interbank Offered Rate (SIBOR) packages to review their loans ahead of the discontinuation of SIBOR in 2024. This article has been edited to reflect these events.
When will interest rates go down in Singapore? Will mortgage rates go down in 2024? These are some of the most common questions among homeowners in Singapore who are financing their houses via bank loans. If you’ve been monitoring the market, you would have realised that in 2022, home loan interest rates climbed quickly from their low COVID-19 levels. In Q1 2024, we remain in a high interest rate environment.
The adage is true: what goes up must come down. "But when?" We hear you. Before reading further, sign up to watch our latest webinar about the 2024 outlook of property prices and mortgage interest rates featuring property finance expert Paul Wee, Vice President – PropertyGuru Finance.

Rising Mortgage Interest Rates in Singapore: What Can We Expect in 2024

US Fed

1 February 2023
+25
4.50% to 4.75%
22 March 2023
+25
4.75% to 5.00%
3 May 2023
+25
5.00% to 5.25%
14 June 2023
no change
5.00% to 5.25%
26 July 2023
+25
5.25% to 5.50%
20 September 2023
no change
5.25% to 5.50%
1 November 2023
no change
5.25% to 5.50%
13 December 2023
no change
5.25% to 5.50%

30 January 2024
no change
5.25% to 5.50%
According to the PropertyGuru Singapore Property Market Outlook 2023, interest rate hikes are expected in 2023 but are likely to moderate in the second half of the year. As predicted, there are signs that interest rates are already moving sideways.
After its December session, the Fed forecasted it would make three quarter-point cuts by the end of 2024, to lower the benchmark rate to 4.6%. The latest Federal Open Market Committee (FOMC) meeting which concluded on 31 January 2024 saw interest rates being held steady for the third time in a row. Prices have started to come down, but the group has signalled it wants to see more positive data before pulling the trigger.
In response, reference rates are also beginning to flatten out. Here’s a quick look at the 3M Compounded SORA trend in 2023/24 so far.

3M Compounded SORA Rates in 2023 and 2024

3 January 20233.029%
2 February 20233.141%
1 March 22033.220%
1 April 20233.577%
2 May 20233.605%
1 June 20233.624%
3 July 20233.654%
1 August 20233.674%
4 September 20233.696%
2 October 20233.701%
1 November 20233.752%
1 December 20233.746%
1 January 20243.701%
1 February 20243.654%
So while we are still in a high interest rate environment, there is some good news and we can expect modest increases. For those who are on a floating home loan, you can expect some relief from persistent increases. What about those looking at financing their homes with fixed rate home loans?
Interest rates on fixed rate home loans have been declining since the beginning of the year and are likely to fall further. In 2022, fixed rate home loans were above 4% but have since dipped. A quick search on our home loan comparison tool reveals that the most competitive mortgage package (in terms of the lowest interest rate offered in the first year) is a fixed-rate home loan at 3.25% (as of 14 December 2023).

What Can Homeowners Do to Manage Their Home Loan Interest Rates?

In this high interest rate environment, homeowners would want to tighten their belts. Ensuring there is enough room in one’s budget for higher home loan repayments is important. And if you haven’t already, consider refinancing your home loan.
According to Paul Wee, Vice President – PropertyGuru Finance, homeowners should:
  • Consider making partial or full repayments if rates become too high via cash and/or CPF to manage cash flow demands
  • Consider increasing the use of CPF for monthly loan servicing
  • Split or refinance loans into separate fixed or variable loans to spread the risk between two portfolios
  • If a homeowner is currently on a SIBOR-linked home loan package, he or she may consider moving to a SORA-pegged one, as the latter is a backwards-looking rate, and rate increases will lag the former. In addition, SIBOR will cease to be quoted from 2024. Banks may also possibly withdraw SIBOR packages earlier, compelling clients to move to other available packages and exacerbating the risk.
Paul also advises those who are seeking certainty to refinance to fixed-rate loan packages.
"If you prefer to be assured that your monthly mortgage payments will remain unchanged for some time, it may be beneficial for you to enter a fixed rate package."

Before Taking a Loan, Consider the Worst-Case Scenario

Additionally, be cognisant of the worst-case scenario before taking out a home loan. Ensure you’re still able to repay your loan should it come to pass (i.e. if you lose your job) and have a buffer.
When budgeting, assume a mortgage interest rate of 3.50% (banks already do this when assessing your debt servicing ratios). It’s the rate we set for our PropertyGuru Finance Mortgage Affordability Calculator too.
Another thing to note is that the home loan package with the lowest interest rate is not always the best choice. Sometimes, low promotional rates may seem very attractive, but it’s foolish to only calculate the costs in the first year. Do the math for the overall costs over the lifespan of the package. The rates may increase sharply after the promotional period, or there may be other fees or less attractive terms and conditions.

Financing Your Property in 2024

If you’re thinking of buying a new home, refinancing your existing home loan or shaking up your investment portfolio with some new property picks, now is not the time to throw caution to the wind. Research your home loan options thoroughly and make an informed decision.
Remember, always look for loans with features that match your individual needs. As Paul puts it, “the ‘best’ home loan may not be the ‘best’ for you”!
Need personalised advice on home loans? Get in touch with a PropertyGuru Finance Mortgage Expert and find the best home loan for you.
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Disclaimer: The information is provided for general information only. PropertyGuru Pte Ltd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.

More FAQs About Singapore Interest Rates 2024

For 2024, forecasts suggest a possible decline in mortgage rates in Singapore.

The National Association of Realtors expects mortgage rates will average 6.8% in the first quarter of 2024, dropping to 6.6% in the second quarter, according to its latest Quarterly U.S. Economic Forecast.

Fixed rate home loans guarantee you a certain rate for an agreed lock-in period. Whereas floating rate home loans fluctuates and is highly dependent on the market condition.