SORA Near 1%: Should You Refinance Your Mortgage in 2026?

The three-month compounded SORA hit 1.07% in March 2026, and if you're still paying more than 2.5% on your home loan, you're leaving money on the table. This is not a marginal difference — on a S$1 million mortgage, the gap between a 3.5% legacy package and a 2.3% floating rate package today represents roughly S$12,000 annually. But the question isn't whether SORA is low. It's whether this window will stay open long enough for you to act, and whether locking in a fixed rate now makes more sense than riding the float. The answer depends entirely on your loan quantum, remaining tenure, and tolerance for rate volatility over the next 24 months.

How the Numbers Work

SORA-pegged mortgages price off the three-month compounded Singapore Overnight Rate Average, which the Monetary Authority of Singapore publishes daily. As of March 2026, that rate sits at 1.07%, down from a peak of 3.82% in October 2023 during the Fed's tightening cycle. Banks add a spread — typically 0.90% to 1.40% depending on your loan-to-value ratio and relationship pricing — which means the effective floating rate you're paying today ranges between 1.97% and 2.47% for most borrowers.

Compare that to fixed-rate packages. Fixed rates in March 2026 have fallen significantly, with most major banks offering two-year fixed packages in the 1.4–1.8% range. The HDB concessionary loan rate sits at 2.60%. If you took out a mortgage in 2021 or early 2022, you're likely locked into a fixed rate between 1.3% and 1.8% — and you should ride that out until maturity. But if you're on a legacy SIBOR package from 2018 or earlier, or a floating rate above 2.5%, the math is unambiguous: refinancing saves you four figures monthly on a typical HDB upgrade loan.

The refinancing cost itself is modest. Legal fees run S$2,500 to S$3,000, and most banks waive valuation fees if your outstanding loan exceeds S$500,000. Clawback penalties apply if you're breaking a lock-in period, typically 1.5% of the outstanding principal, but these disappear after your initial lock-in expires. The breakeven calculation is straightforward: divide your total switching cost by your monthly savings. For a S$800,000 loan moving from 3.3% to 2.2%, you save roughly S$733 per month, which means you recover S$3,000 in legal fees within four months.

What the Current Rate Environment Means

The MAS eased its monetary policy in April 2025, reducing the rate of S$NEER appreciation slightly as Singapore's economic growth slowed. Core inflation moderated to 2.1% in February 2026, down from 3.3% in mid-2024, supporting the easing stance. The Fed cut its policy rate three times between September 2025 and January 2026, bringing the target range to 4.00%–4.25%, and futures markets price in one additional 25-basis-point cut by year-end 2026.

This matters because SORA moves in loose sympathy with Fed policy, though the correlation isn't mechanical. When the Fed cuts, US dollar liquidity eases, which flows through to Singapore's interbank market and pulls overnight rates lower. The three-month compounded SORA lags spot moves by roughly 90 days, which means the 1.07% rate you see in March 2026 reflects conditions from December 2025 through February 2026. If the Fed delivers one more cut in Q4 2026, SORA could drift toward 0.90% by early 2027 — but that's the floor, not a new normal.

The risk sits on the upside. Inflation in the US remains sticky around 2.8%, and labour markets have stayed tight despite slower GDP growth. If inflation re-accelerates or geopolitical shocks disrupt energy markets, the Fed could pause or even reverse cuts. In that scenario, SORA would climb back above 1.5% by mid-2027, and floating-rate borrowers would see monthly repayments rise by S$300 to S$400 on a million-dollar loan. This is the trade-off: you capture savings now, but you accept repayment volatility if the macro environment shifts.

Fixed vs Floating: The Real Trade-Off

The conventional wisdom says to fix when rates are low and float when they're high. That's backwards. You fix when you believe rates will rise from here, and you float when you believe they'll fall or stay flat. In March 2026, the market has brought fixed rates down substantially, with two-year packages in the 1.4–1.8% range from major banks.

If you can lock in a two-year fixed at 1.6–1.7%, you're capturing near-current SORA levels plus a modest bank margin. Floating at SORA + 0.90–1.40% would save you 10–30 basis points in the short term if SORA remains flat or drifts lower. But if SORA climbs back to 2.5% by 2028 — a plausible scenario if global conditions shift — the fixed-rate borrower comes out ahead. The decision hinges on your risk appetite and cash flow stability. If you're stretching to meet TDSR limits or you've recently upgraded and your household income is tight, the fixed rate buys you certainty. You know exactly what you'll pay each month, and you won't face repayment shock if rates spike.

Floating makes sense for borrowers with surplus cash flow, shorter remaining tenures, or plans to sell within three to five years. If you're holding the property as an investment and rental yield covers 70% of your mortgage, the floating rate maximises your carry. If you're planning to downsize or liquidate before 2030, you avoid paying the premium for long-term fixed certainty you won't use.

One hybrid approach: take a two-year fixed now at 2.65%, lock in near-term certainty, and reassess in 2028 when your lock-in expires. By then, you'll have clarity on whether the Fed's easing cycle has run its course or reversed. This strategy costs you 50 to 60 basis points versus floating today, but it caps your downside if inflation resurges. For borrowers with loan quantums above S$1.5 million, that insurance premium is worth paying. For smaller loans or shorter tenures, the cost outweighs the benefit.

When to Act

Refinancing takes six to eight weeks from application to disbursement, which means if you start the process in April 2026, your new loan kicks in by June. The lock-in window matters: most banks require a two-year commitment, and breaking early costs 1.5% of outstanding principal. If you're confident in your property hold period and cash flow, move now while SORA remains below 1.10%. Waiting for SORA to drop further is a losing bet — the downside from here is 15 to 20 basis points at most, while the upside risk is 100 basis points or more if macro conditions deteriorate.

The exception: if you're within 12 months of your current lock-in expiry and your existing rate is below 2.8%, wait it out. The clawback penalty erases any near-term savings, and you're better off riding your current package to maturity then switching. But if your lock-in has already expired and you're on a legacy floating rate above 2.5%, or a fixed rate above 3%, you're paying an opportunity cost every month you delay. The S$3,000 in legal fees is negligible compared to the S$8,000 to S$15,000 you'll save annually on a typical upgrade loan.

For context on how TDSR limits affect your refinancing capacity, see our TDSR framework guide.