Fixed-Rate Home Loan
What is a fixed-rate home loan?
A fixed-rate home loan charges an interest rate that stays the same for the first few years of the loan, regardless of market movements. After the fixed period, which differs by package and is usually tied to the lock-in period, the rate becomes variable. It gives predictable repayments but won't fall if market rates drop.
Key facts
- Rate
- Fixed for the first few years, then variable
- Fixed period
- Differs by loan package; set out in the fact sheet
- If market rates fall
- Your rate stays the same during the fixed period
- If market rates rise
- Your rate stays the same during the fixed period
- Bank's obligation
- Must not change a component stated as fixed during the fixed period
- Compare with
- Floating-rate loans, such as SORA-pegged loans
As of 6 Nov 2026. Source: MoneySense, MAS.
How a fixed-rate loan works
MoneySense describes fixed-rate packages as having a rate that is fixed for the first few years, often as a promotional rate, after which variable rates apply. Many packages tie the fixed period to the lock-in period.
| Fixed-rate loan | Floating-rate loan | |
|---|---|---|
| Rate in the early years | Stays the same | Moves with a reference rate |
| If rates fall | You don’t benefit | Your repayment falls |
| If rates rise | You are protected | Your repayment rises |
| After the fixed period | Becomes variable | Stays variable |
Example
You borrow $800,000 over 25 years. The rates here are for illustration.
| Scenario | Rate | Monthly repayment |
|---|---|---|
| Fixed for 3 years | 2.5% | $3,588.93 |
| Floating, if rates fall | 2.0% | $3,390.83 |
| Floating, if rates rise | 3.0% | $3,793.69 |
The fixed rate costs about $198 more a month if rates fall, and saves about $205 a month if they rise.
Common mistakes
- Forgetting the rate after the fixed period. Check what you will pay from year 4 onwards.
- Assuming you can switch freely. Penalties may apply during the lock-in.
- Comparing only the fixed rate. Compare the effective interest rate across the whole package.
Frequently asked questions
What happens when the fixed period ends?
The rate becomes variable, usually based on a reference rate such as SORA or the bank's board rate. Check how much your repayment would rise, and consider repricing or refinancing as the fixed period ends.
Is a fixed rate better than a floating rate?
Neither is always cheaper. A fixed rate protects you if rates rise; a floating rate benefits you if rates fall. Compare packages by their effective interest rate over several years, not just the first year.
Can I leave a fixed-rate package early?
Usually only by paying a penalty during the lock-in period. The loan's fact sheet lists the fees for full or partial repayment and refinancing.
Related terms
Sources
Every figure on this page was checked against the official government sources above on 6 Nov 2026. See our editorial policy.
This is general information, not financial, legal or tax advice.