Refinancing your home loan in 2025 could be one of the smartest financial moves you make if you play it right. With SORA (Singapore Overnight Rate Average) already showing signs of decline ahead of anticipated US Fed rate cuts, homeowners now have a golden opportunity to lower their monthly repayments and lock in long-term savings.
Where is SORA Heading?
- 1M/3M Compounded SORA has already declined in early 2025.
- The market expects the US Federal Reserve to cut rates in the second half of the year.
- Historically, 3M SORA drops ~0.5% for every 1% Fed rate cut (but with a delay).
- Current 3M SORA (as of June 2025): around 2.183% (down from 3.15% in late 2023). SORA has declined even before any Fed rate cut in 2025. Will SORA continue to decline or stabilise at the current level when Fed rate recommences cuts?
When to Refinance Based on SORA Trend
| Current Situation | Suggested Action |
| You’re on a fixed rate > 3.0% | Consider refinancing now to a cheaper package |
| You’re on a floating rate > 2.8% | Watch SORA monthly – consider switching if it dips more |
| You’re nearing lock-in expiry (6 months) | Start comparing refinance options now |
| Still within lock-in period | Monitor but check for partial prepayment strategies |
Smart Strategies Based on Projections
1. Consider Switching to Short-Term Fixed Packages
- Fixed rates around 2.08–2.40% are available now.
- Locking a 2-year fixed gives certainty while riding the short-term downtrend.
- If rates fall further, you can reprice after 2 years.
2. Use Floating SORA With Caution
- If you switch to a SORA floating package, ensure:
- There’s no lock-in, or short 1-year lock-in
- You have buffer cash in case SORA fluctuates
- Good for borrowers who expect SORA to fall lower 2% by end-2025 or beyond.
3. Reprice With Your Existing Bank
- While repricing with your existing bank may help you avoid legal fees, do note that an administrative fee may apply. Also, the interest rates your current bank provides might not always be as competitive as those found in the wider market. It’s wise to thoroughly compare all available options before moving forward.
Real Example – Potential Savings
Loan: $500,000, 20 years left
Current rate: 3.2% floating
Refinance to: 2.25% fixed (2 years)
Monthly savings: ~$234/month
Total 2-year savings: ~$5,616
⚠️ Watch Out For:
- Legal subsidy and valuation subsidy: May need to be repaid if you sell or refinance again within 3 years.
- Lock-in Periods: Always check early redemption penalties.
- Refinancing Costs: ~$1,800–$2,500 estimated (legal + valuation) — often subsidised for loans >$500k.
Recommendation Summary
| If You Are… | Strategy |
| Paying above 2.8% | Refinance now to lower fixed/SORA rate |
| Unsure about market movement | Go with 2-year fixed for stability |
| Comfortable with risk | Choose SORA floating for savings upside |
| Loan < $300k | Consider repricing due to subsidy limits |
Would you like:
- A comparison of current refinance packages?
- Help assessing your current rate vs. savings potential.
IQrate has access to all the best offers available in the market. So, just share with us your current rate, loan size, and tenure. We will identify the best home loan offers and save you time and effort.