HDB Flat Owners Leverage Lower Interest Rates to Refinance Bank Loans at a 3-Year Low

Singapore Homeowners Rush to Refinance Mortgages as Interest Rates Plummet

Singapore – A meaningful surge in mortgage refinancing activity is underway as interest rates have fallen to their lowest levels in three years. Homeowners,particularly those with Housing Board (HDB) flats,are increasingly switching to bank loans to capitalize on the savings,according to industry experts.

The Shift Towards Lower Rates

Throughout 2025, a growing number of HDB flat owners have opted for bank loans, recognizing the considerable cost benefits. Current fixed- and floating-rate bank loan packages range between 1.55 percent and 1.8 percent,substantially lower than the 2.6 percent concessionary rate offered by HDB.

Several factors are driving this trend. Joel Lim, an associate director at Dollarback Mortgage, noted that homeowners who secured higher fixed-rate bank packages in 2022 and 2023 are now exploring refinancing options as their initial lock-in periods expire.

Understanding floating Rates and SORA

Floating-rate mortgages are commonly linked to the three-month compounded Singapore Overnight Rate Average,or SORA,a benchmark used by banks to determine home loan pricing. The SORA rate peaked above 3.6 percent for much of 2023, but has since experienced a steep decline, currently hovering around 1.34 percent as of October 30th – the lowest in over three years.

Experts predict that further rate cuts from the US Federal reserve, sustained low local inflation, and a robust Singapore dollar could push SORA even lower.

Ancient Trends and Current Activity

The last major wave of refinancing occurred between 2019 and 2020, when floating rates dipped below 1.5 percent. During that period, the volume of refinancing from HDB loans to bank loans jumped by 35 to 40 percent year-over-year.

Current data indicates a similar pattern is emerging. OCBC Bank has reported a more than 60 percent increase in HDB homeowners switching from HDB loans to OCBC home loans in the first nine months of 2025 compared to the same period in 2024. Maryanne Phua,Head of Home Loans at OCBC Bank,revealed that approximately 90 percent of HDB owners who refinanced chose fixed-rate loans,citing a desire for predictable monthly repayments.

DBS Bank has also observed a noticeable rise in demand for their POSB HDB home loans, with a three-year fixed-rate package currently offered at 1.7 percent or lower, featuring no penalties for early repayment or property sale.

Loan Type	Interest Rate (Approx. Nov 2025)	Lock-in Period
HDB Concessionary Loan	2.6%	Varies
Bank Fixed Rate (2-year)	1.48%	Typically 2-3 years
Bank Fixed Rate (3-Year)	1.5%	Typically 2-3 years
Bank Floating Rate	1.55% – 1.8% (SORA-pegged)	Typically 1-2 years

private Property Market Shows Different Trends

While refinancing activity is booming for HDB loans, the private property market presents a different scenario. According to David Baey, Chief Executive of Mortgage Master, some clients are choosing to sell their existing private homes and purchase new ones, taking advantage of the improved financial climate instead of simply refinancing their existing mortgages.

did You Know? Refinancing your mortgage can potentially save you thousands of dollars over the life of the loan! Always compare rates and terms from multiple lenders.

Future Outlook

Analysts predict that the current refinancing momentum could extend into 2026, provided interest rates remain low. Sebastian Sieber,Managing Director of Cashew Mortgages,cautions that further declines might potentially be modest,given prevailing macroeconomic conditions.

Redbrick Mortgage Advisory anticipates continued healthy refinancing activity in 2026, though a moderation is possible as borrowers who secured loans in 2023 and 2024 at higher rates have likely already refinanced.

However, HDB loan refinancing is expected to remain steady in 2026, though some homeowners may be hesitant to switch from HDB loans due to the inability to revert to HDB financing in the future.

Long-Term Considerations for Homeowners

When considering mortgage refinancing, homeowners should carefully evaluate their financial situation, long-term goals, and risk tolerance. Factors such as loan tenure, potential prepayment penalties, and the stability of income streams should all be taken into account. Working with a qualified mortgage advisor is a prudent step in navigating these complexities.

Frequently Asked Questions About Mortgage Refinancing

• What is mortgage refinancing? Mortgage refinancing involves replacing your existing home loan with a new one, often to secure a lower interest rate or more favorable terms.
• Is refinancing right for me? Refinancing can be beneficial if current interest rates are lower than your existing rate,or if you want to change your loan term.
• What is SORA and how does it affect my mortgage? SORA (Singapore Overnight Rate Average) is a key benchmark for floating-rate mortgages in Singapore. Changes in SORA directly impact the interest you pay.
• Can I refinance my HDB loan to a bank loan and back? No, once you refinance from an HDB loan to a bank loan, you cannot revert to an HDB loan.
• What are the costs associated with refinancing? Refinancing typically involves fees such as valuation fees, legal fees, and potentially a prepayment penalty on your existing loan.
• How can I find the best refinancing rates? Compare offers from multiple banks and consider working with a mortgage broker to find the most suitable option.
• Does refinancing affect my credit score? Applying for a new loan can temporarily lower your credit score, but responsible repayment will rebuild it.

Are you considering refinancing your mortgage? What are your biggest concerns about the process?

What factors are most crucial to you when choosing a new home loan?

What is the current state of home loan interest rates in Singapore,and how does it compare to rates in recent years?

Understanding the Current Landscape of HDB Loan Refinancing

HDB flat owners are increasingly taking advantage of a significant dip in home loan interest rates,hitting a three-year low as of November 2025. This presents a prime opportunity for HDB loan refinancing, allowing homeowners to possibly save thousands of dollars over the remaining tenure of their loans. The current climate is driven by a combination of factors, including stabilizing global economic conditions and competitive pressures amongst banks vying for market share in the Singapore housing loan sector.

This article will delve into the specifics of this trend, outlining the benefits, eligibility criteria, and practical steps for refinancing your HDB loan. We’ll also explore current mortgage rates Singapore and provide insights into navigating the refinancing process effectively.

why Now is a Favorable Time to Refinance

The current low-interest rate environment is the key driver. Here’s a breakdown of the advantages:

* Reduced Monthly Repayments: Lower interest rates directly translate to smaller monthly installments, freeing up cash flow for other financial goals.

* Significant Long-Term Savings: Even a small reduction in the interest rate can result in ample savings over the life of the loan, particularly for longer loan tenures. Consider a 0.5% reduction – this can equate to tens of thousands of dollars saved.

* Potential to Shorten Loan Tenure: Some homeowners are using the opportunity to maintain their current monthly repayments while shortening their loan tenure, allowing them to become debt-free sooner.

* Access to Better Loan Packages: Banks are actively offering competitive HDB refinancing packages to attract customers, including features like cashback incentives and reduced legal fees.

Eligibility Criteria for HDB Loan Refinancing

Before exploring refinancing options, ensure you meet the basic eligibility requirements:

* Remaining Loan Tenure: Most banks require a minimum remaining loan tenure, typically at least one to three years.

* Credit Score: A good credit score is crucial for securing favorable interest rates. Banks will assess your credit history to determine your risk profile.

* income Stability: Demonstrating a stable income stream is essential. Banks will review your employment history and income documentation.

* Debt-to-Income Ratio (DTI): Banks will assess your DTI ratio to ensure you can comfortably manage the loan repayments. A lower DTI is generally preferred.

* HDB Rules & Regulations: Ensure your refinancing aligns with current HDB guidelines and regulations.

Comparing HDB Refinancing Rates: A Snapshot (November 2025)

As of november 1st, 2025, here’s a general overview of prevailing HDB refinancing rates (these are subject to change, so always confirm with individual banks):

Bank	Fixed Rate (2 Years)	Floating Rate
DBS	2.88% – 3.28%	2.20% – 2.60%
OCBC	2.95% – 3.35%	2.25% – 2.65%
UOB	3.00% – 3.40%	2.30% – 2.70%
Standard Chartered	3.10% – 3.50%	2.35% – 2.75%

Note: rates are indicative and depend on individual circumstances.

Fixed vs. Floating Rates:

* Fixed Rates: Offer predictability and stability, shielding you from potential interest rate hikes. However, they are typically higher than floating rates.

* Floating Rates: Are linked to benchmarks like the Singapore Overnight Rate Average (SORA) and can fluctuate. They generally start lower but carry the risk of increasing repayments if SORA rises. SORA rates are a key factor to monitor.

The Refinancing Process: A Step-by-Step Guide

1. Assess Your Current Loan: Understand your current interest rate, remaining loan tenure, and any prepayment penalties.
2. Check Your Credit Score: Obtain a copy of your credit report to identify any potential issues.
3. Shop Around: Compare rates and packages from different banks. Utilize online comparison tools and consult with a mortgage broker Singapore for expert advice.
4. Submit Your Application: Prepare the necessary documentation (income proof, HDB loan statement, NRIC, etc.) and submit your application to the chosen bank.
5. Loan Approval & Legal Conveyancing: Upon approval, the bank will handle the legal conveyancing process with HDB.
6. loan Disbursement: The new loan will be disbursed to repay your existing HDB loan.

Potential Costs Associated with Refinancing

While refinancing can save you money, be aware of potential costs:

* Valuation Fee: A valuation fee is typically required to assess the current market value of your flat.

* Legal Fees: