“Will interest rates go down in 2025?” and ‘Will Singapore home loan rates fall?” are the two big questions Singaporean homeowners want to know. And the answer to both questions is a likely yes.
Mortgage rates in Singapore tend to move in tandem with the US Fed interest rate, which was cut three times from September to December 2024.
In the latest meeting on 29 January 2025, the Fed kept the interest rate unchanged in the 4.25% to 4.50% range and said there would be no rush to cut them again until inflation and jobs data made it appropriate. Here’s what we can expect from Singapore’s interest rate movements for the rest of 2025.
Mortgage Interest Rates in Singapore: What Can We Expect in 2025
After a series of interest rate hikes in 2023, the rates began to move sideways. The Federal funds rate remained unchanged since June 2023 and was cut for the first time in the latest September 2024 meeting. The Fed interest rates were slowly adjusted downward and now sit in the 4.25% to 4.50% range.
Singapore’s benchmark rates followed a similar trend from the second half of 2024 onwards, as seen in the table below of the 3M Compounded SORA rates. 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 (from H2 2024 onwards)
| Month | 3M Compounded SORA Rate |
| 1 July 2024 | 3.6305% |
| 1 August 2024 | 3.6384% |
| 2 September 2024 | 3.5694% |
| 1 October 2024 | 3.4932% |
| 1 November 2024 | 3.3658% |
| 2 December 2024 | 3.2093% |
| 2 January 2025 | 3.0227% |
Consequently, mortgage interest rates in Singapore have declined and Singapore home loan rates have continued to fall further.
A quick search on PropertyGuru Finance’s 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 2.45% (as of 31 January 2025). This is a far cry from the 4.0% and up mortgage rates in Singapore observed at the end of 2022.
Interest rate predictions in 2025 suggest that mortgage rates in Singapore will likely drop further this year. For example, fixed home loan rates are expected to fall below 2% over the next 1.5 years.
However, Apple Tan, Team Lead – Mortgages, PropertyGuru Finance shares that homeowners shouldn’t expect dramatic rate cuts as the “Federal Reserve does not need to rush to lower interest rates, indicating a slower pace of rate cuts”. Ben Goh, Team Lead – Mortgages, PropertyGuru Finance agrees, saying that Singapore home loan rates will fall, but at a modest pace.
“With the US Fed’s revised projection of two quarter-point rate cuts in 2025, expectations of mortgage rates in Singapore trending downwards may moderate this year. However, if growth slows in the later part of the year, rates could be cut more quickly.”
That being said, the answer to “Will interest rates go down in 2025?” and “Will Singapore home loan rates fall?” remains a likely yes.
What Can Homeowners Do to Manage Their Home Loans?
Mortgage rates in Singapore have fallen from their highs at the end of 2022, dipping below 3% from Q2 2024 onwards. This has led to an increase in mortgage loan refinancing activity as savvy homeowners take advantage of the fact that lower Singapore home loan rates are falling.
While the US Fed is ‘in no hurry’ to cut rates again, all signs point towards mortgage rates in Singapore moving downwards. If you haven’t done so already, our Mortgage Experts encourage homeowners to consider refinancing.
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, current mortgage rates for 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 potentially saving hundreds monthly on your home loan.
However, it’s worth noting that interest rates are likely to moderate 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.
If you do not wish to refinance your home loan now or are unable to, Apple counsels that “any time is always a good time to explore refinancing options” for potential savings. If you need help or have questions on current mortgage rates, you can always speak with one of our PropertyGuru Finance Mortgage Experts for help.
When Buying a New Home, What Should You Consider?
There are speculations of a more stable and growing property market going into the first half of 2025. Coupled with the favourable current mortgage rates, some may consider buying a new home.
Remember, the answer to “Will interest rates go down in 2025?” and “Will Singapore home loan rates fall?” is yes. Our Mortgage Expert, Ben, believes that interest rate predictions in 2025 bode well for those buying new property launches.
“Current mortgage rates in Singapore may potentially reduce further as more progressive drawdowns on loans take place over time, resulting in lower cost of financing.”
However, buying a new property is a big financial commitment and it is advisable to err on the side of caution. Ensuring enough room in one’s budget for higher home loan repayments is essential. Consider the worst-case scenario before taking out a home loan.
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 Pre-qualification Tool too. You can calculate how much loan you’d be eligible to take out and determine the property price that fits your budget.
Consider the worst-case scenarios before taking out a home loan. You want to ensure you can still repay your loan if the worst happens (e.g. if you lose your job).
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 isn’t wise 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 2025
If you’re considering buying a new home, refinancing your existing home loan or shaking up your investment portfolio with new property picks, always research your home loan options thoroughly.
Look for loans with features that match your individual needs. Remember, 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 to find the best home loan for you. Best of all? It’s free!
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