Singapore’s home loan interest rates are inherently cyclical, closely mirroring global economic trends and central bank policies. Historically, rates have experienced significant fluctuations in response to major economic events.
In the 1990s, home loans were at their highest, ranging from 5% to 7%. The 1998 Asian Financial Crisis saw rates spike to 5%, followed by a rapid decline of 4.7% within 14 months. Similarly, during the 2008 Global Financial Crisis, rates peaked before declining significantly by 5% within 17 months.
Leading up to the COVID-19 pandemic in 2019, mortgage/home loan rates had begun to rise. During the pandemic years of 2020-2021, rates fell to a low of 1-2%. Long-term interest rates hit a record low of 0.81% in October 2020. Aggressive US Federal Reserve rate cuts and quantitative easing measures largely drove this sharp decline.
Subsequently, in response to rising global inflation between 2022 and 2023, mortgage/home loan rates surged to 3.0%-3.5%. Fixed rates peaked at 4.25% in the first quarter of 2023 before easing to 3.05% by the end of that year.
A strong correlation exists between home loan rates in Singapore and the US Federal Reserve rates. SORA, the new benchmark, often moves with global liquidity trends and US rate policies. MAS mainly manages inflation through exchange rate policy, not by setting direct interest rates.
Historical patterns show a common interest rate cycle. Rates usually rise for two years.
They stay high for two years. Then, they drop for six years. If this pattern holds, we anticipate that rates will begin to ease in 2025.
The clear description of how interest rate cycles work is helpful. Mortgage rates usually rise for two years, stay high for two years, and then drop for six years. This pattern helps us understand what is happening in the market today. Applying this pattern to the recent rate surge (2022-2023), which saw rates peak around 3.0-3.5%.
This suggests that the current easing trend is not just a short-term change. It may be the start of a longer downward cycle. This aligns with local banks’ forecast for SORA to drop to 2.2%-2.6% by the end of 2025 and the general prospect of falling interest rates heading deeper into 2025.
This cyclical understanding gives a strong way to predict future rate changes. It helps borrowers plan for refinancing or getting new loans. While not a guarantee, it provides a probabilistic outlook that can inform long-term financial decisions.
Even though MAS has a unique way to manage money, it mainly uses exchange rates to control inflation. Global financial markets are closely tied to Singapore. This means that significant monetary policy actions by the US Federal Reserve have a substantial impact on the local money supply.
As a result, these actions influence SORA and bank lending rates. This transmission mechanism bypasses direct MAS interest rate intervention.
For property market participants, a purely domestic economic outlook is therefore insufficient for forecasting mortgage costs. They need to watch global central bank actions and international bond market changes.
This includes the 10-year US Treasury yields. These factors are key drivers of their mortgage costs. This shows that Singapore is a small, open economy. External forces can greatly affect its financial conditions, even with strong internal governance.
Historical Singapore Home Loan Interest Rates and Key Economic Events
| Year (Jan) | Key Event/Economic Cycle | Impact on Interest Rates | 1M SIBOR(%) | 3M SIBOR(%) | 1M SORA(%) | 3M SORA(%) | Long Term Interest Rate (High/Low)(%) |
| 1998 | Asian Financial Crisis | Rates spiked to 5%, then dropped 4.7% in 14 months | – | – | – | – | Aug 1998: 5.69% |
| 2008 | Global Financial Crisis | Rates peaked and then dropped 5% within 17 months | – | – | – | – | – |
| 2015 | – | – | 0.950 | 1.070 | 0.157 | 0.122 | – |
| 2016 | – | – | 0.625 | 0.872 | 0.303 | 0.350 | – |
| 2017 | – | – | 1.008 | 1.208 | 0.253 | 0.148 | – |
| 2018 | – | – | 1.517 | 1.642 | 0.915 | 0.847 | – |
| 2019 | Pre-COVID Rate Hike | Mortgage rates started rising | 1.797 | 1.803 | 1.619 | 1.466 | – |
| 2020 | COVID-19 Pandemic | Rates dropped to an all-time low of 1-2% | 1.749 | 1.774 | 1.255 | 1.267 | Oct 2020: 0.81% |
| 2021 | – | – | 0.251 | 0.405 | 0.241 | 0.167 | – |
| 2022 | Inflation Surge | Mortgage rates surged to 3.0% – 3.5% | 0.300 | 0.437 | 0.231 | 0.195 | – |
| 2023 | Inflation Surge | Mortgage rates surged to 3.0% – 3.5% | 4.031 | 4.250 | 2.572 | 3.017 | – |
| 2024 | – | – | 4.025 | 4.056 | 3.649 | 3.701 | – |
Note: SIBOR and SORA rates are for January of each year. Long Term Interest Rate refers to Singapore Government Securities: Yield: Month End: 10 Years.
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