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**Taking a floating rate now to "switch later" is generally riskier and less flexible than most buyers assume, though the current rate environment gives you a clear financial trade-off to evaluate.**

Here is the reality of how that strategy works on a S$750k loan:

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### 1. The Cost of "Switching Later"

If you take a floating package now, you cannot switch freely whenever rates drop:

* **The Lock-in Penalty:** Floating packages typically come with a **1- to 2-year lock-in period**. If you switch banks or break the package during this period, banks charge a **1.5% penalty on the outstanding loan**—which equals **S$11,250 on a S$750k facility**.
* **Conversion Fees:** Staying within the same bank to switch from floating to fixed usually requires a "free conversion" feature in your contract; otherwise, banks charge an admin fee of **S$500 to S$1,000**.
* **Timing the Market:** Fixed rates do not drop after floating rates drop; banks price fixed loans based on the *interest rate swap curve* (future expectations). By the time you notice rates falling, banks may have already adjusted their packages.

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### 2. The Current Math on S$750k

* **2-Year Fixed at 1.80%:** On a 25-year loan, your monthly instalment is roughly **S$3,107/month**, completely insulated from volatility.
* **3M SORA Floating:** 3-Month Compounded SORA currently sits around **1.25%**, with bank spreads running **+0.20% to +0.55%**, putting effective floating rates at roughly **1.45% to 1.80%**.
* **The Spread Gap:** At an effective floating rate of ~1.46%, your instalment would be ~S$2,987/month—a savings of around S$120/month (~S$1,440/year).

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### 3. Which Strategy Fits You?

* **Take the 1.8% Fixed if:** You want total cash flow certainty for your monthly budget, or you don't want to monitor SORA benchmark announcements every quarter.
* **Take Floating only if:** Your contract includes **zero lock-in** or a guaranteed **free one-time conversion to a fixed package**, allowing you to lock in without paying the 1.5% penalty when rates bottom out.

If your floating offer has a strict 2-year lock-in with no free conversion clause, the modest potential savings do not justify the risk of getting trapped.

---

Gan Eng Joo Onassis 颜荣裕, REALTOR®

MSc BIT (Middlesex, UK); BBA (UniSA)

CEA Reg No: R021244C | Mobile: (+65) 88899918 

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ANSWERS

✔1. A 2-year fixed rate of 1.8% on a $750,000 mortgage offers repayment certainty and protects you if interest rates rise. The key question is whether floating rates would fall enough to outweigh the risk of waiting.

✔2. Floating now and fixing later could save money if rates keep dropping, but future cuts are not guaranteed. You could end up paying more if rates stay flat or rise, or if fixed rates become less attractive.

✔3. As of October 2026, Singapore mortgage rates have been moving up, with market uncertainty making further declines far from certain. A 1.8% fixed offer looks worth serious consideration if the terms are competitive.

✔4. Before deciding, compare the floating rate plus bank spread, lock-in period, switching fees and whether you can reprice without penalty. On a $750k loan, even a small rate difference can add up.

My take: If you value certainty, I’d lean towards locking in 1.8% for two years rather than betting on future rate cuts. If you can comfortably handle higher repayments and the floating package allows an easy, low-cost switch, floating may be worth considering.

“Hope for the best, but prepare for the worst.”

WhatsApp me at >> ✔✔9856 9255 or through this link.:https://wa.me/6598569255.
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Hi there!

At 1.8% fixed for two years on a $750,000 mortgage, I would say the offer is certainly worth considering.

However, **the question isn't simply whether interest rates will fall further. It's whether the potential savings from a floating-rate package justify the uncertainty and risks involved.**

A fixed-rate package provides certainty over your interest rate for the agreed period, while a floating-rate package allows you to benefit if benchmark rates decline, but also exposes you to higher repayments should rates increase.

**One important consideration is your plan to switch from floating to fixed later.**

This may not be as straightforward as it sounds. Depending on the bank's package, there could be lock-in periods, repricing restrictions or penalties for switching.

I would suggest comparing both packages based on:

1. The actual floating rate offered, including the bank's spread.
2. The lock-in period and any early repayment or refinancing penalties.
3. Whether the bank allows conversion from floating to fixed without additional charges.
4. Your expected holding period and comfort level with fluctuating mortgage repayments.

**Rather than trying to predict the lowest point of interest rates, I would focus on securing a mortgage package that suits your financial circumstances.**

My suggestion is to have a mortgage banker compare the actual packages side by side, including the potential savings and risks under different interest-rate scenarios.

I'd be happy to connect you with a mortgage banker who can assist with this assessment.

**May I ask whether this $750,000 mortgage is for a new property purchase or refinancing an existing home?**

That will help us determine which financing options and considerations are most relevant to you.

Best regards,
**Geryl Lim**
CEA Reg. No. R014783H
WhatsApp: 9278 7772  Read More

Hello! That's a great question and it depends on your risk appetite as well as the type of property you are financing.

I'm a Harvard graduated real estate agent with a degree in economics, and have supported clients on more than $1 billion in transactions.

I monitor and study the interest rates trends carefully and would be happy to advise on the current situation, the US Fed's latest decision this week affecting Singapore's rates and what you might expect in the near future.

Feel free to drop me a note and we can discuss further what might be the best route for you to take.

Kay Cloud
The Harvard Educated Agent
Propnex Realty Pte Ltd
cloud@propnex.com
Tel: (+6.5.) 8.5.6.7.4.5.8.5
Whatsapp -> https://wa.me/6585674585 Read More

Hi,

1) The calculation of fixed at 1.8% and the lowest floating rate ever was 1%.
Monthly payment of $750k mortgage for 25 years loan tenure at 1.8% = $3.11k
Monthly payment of $750k mortgage for 25 years loan tenure at 1% = $2.83k
The difference is $280.

2) The calculation of fixed at 1.8% and the highest floating rate ever was 3.56% 3M-SIBOR rate in JUn & Jul 2006. This 3M-SIBOR would lead to floating rate up to 4.16% minimum, assuming bank's spread of 0.6%.
Monthly payment of $750k mortgage for 25 years loan tenure at 1.8% = $3.11k
Monthly payment of $750k mortgage for 25 years loan tenure at 4.16% = $4.03k
The difference is $920.

3) The highest SORA rate after SIBOR rate was being phase-out was in Nov 2023 at 3.76%, the floating rate would be at 4.36%

4) Today's 3M-SORA is 1.2683%. By adding banks spread of 0.6%. The lowest floating rate would be 1.87%.

5) Now, looking back at the bank's offer of 1.8% fixed rate for 2 years. Do you think it is still not worth to consider than the floating rate?

6) My personal opinion would be to tie to this rate to the longest if possible.

All The Best!!!

I hope the above answers your main concerns. If you have more questions, please feel free to contact me at 9011*0636 or email ling.ck7@gmail.com for more information.
I'll be glad to assist.

Best regards
Ling CK
9011 * 0636
ling.ck7@gmail.com
https://www.linkedin.com/in/ckling/
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