Will Singapore Interest Rates for Home Loans Go Down in 2024?

Singapore’s interest rates for home loans have been falling since reaching highs at the end of 2022. While we know the answer to “Will interest rates go down in 2024?” is a resounding “yes,” the question remains, “How much will mortgage interest rates in Singapore come down by?”

Mortgage interest rates in Singapore will likely fall further in 2025, with the four US Fed interest rate cuts expected in the coming year. The benchmark rate is expected to be at 4.1% by the end of 2025. 

So here’s what we can expect from Singapore’s interest rate movements for the rest of 2024.

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

After a series of interest rate hikes in 2023, interest rates began to move sideways. The Federal funds rate remained unchanged since June 2023 and were cut for the first time in the latest September 2024 meeting. The Fed interest rates were adjusted downward by 0.5% and now sit in the 4.75% to 5% range.

In turn, reference rates have begun to flatten out and drop. The SORA rate today is already lower than it was in the same time period last year.

Here is a quick look at the 3M Compounded SORA rates in 2024. If you would like to look at the SORA rate today, you can do so on the Monetary Authority of Singapore (MAS) website.

3M Compounded SORA Rates in 2024

Consequently, mortgage interest rates in Singapore have also begun declining and continue to fall further.

A quick search on our home loan comparison tool reveals that the most competitive mortgage package (in terms of the lowest mortgage interest rate in Singapore offered in the first year) is a fixed-rate home loan at 2.40% (as of 13 October 2024). This is a far cry from the 4.0% and up mortgage rates observed at the end of 2022.

So, while we remain in a relatively high interest rate environment, homeowners can expect some good news in 2024 and beyond. Those on a floating home loan can expect relief from persistent increases.

What Can Homeowners Do to Manage Their Home Loans?

In this high-interest-rate environment, homeowners would want to tighten their belts. Ensuring enough room in one’s budget for higher home loan repayments is essential.

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 withdraw SIBOR packages earlier, compelling clients to move to other available packages and exacerbating the risk.

Consider Refinancing Your Home Loan

And if you haven’t already, consider refinancing your home loan.

For those seeking certainty, refinancing to a fixed-rate loan package can reassure you as your monthly mortgage payments will remain unchanged for some time.

Additionally, if you look at the available mortgage packages on the market, fixed-rate home loans are the better deal now. If you’re on a floating rate home loan and you calculate your mortgage payment amounts, refinancing to a fixed rate loan could mean saving potentially hundreds monthly on your home loan.

Still, consider how Singapore’s interest rates for home loans are projected to fall further. You can refinance to a loan with a zero or a shorter lock-in period. That allows you the flexibility to take advantage of interest rate fluctuations and refinance when mortgage interest rates in Singapore fall further.

When Buying a New Home, Consider the Worst-case Scenario Before Taking out a Loan

Additionally, consider the worst-case scenario before taking out a home loan. Calculate your mortgage payment amounts to ensure you’re still able to repay your loan should it come to pass (e.g., if you lose your job) and have a buffer.

When budgeting, assume a mortgage interest rate of 4.00% (banks already do this when assessing your debt servicing ratios). It’s the rate we set for our PropertyGuru Finance Mortgage Affordability Calculator too. You can calculate mortgage payment amounts for your home loan using our online tool.

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 calculate mortgage payment amounts only for 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. The ‘best’ home loan on paper may not be the ‘best’ for you. 

Need personalised advice on home loans or help to calculate your mortgage payment amounts? Contact a PropertyGuru Finance Mortgage Expert and find the best home loan for you. Best of all? It’s free!

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