Floating-Rate Home Loan
What is a floating-rate home loan?
A floating-rate home loan has an interest rate that moves with a reference rate, such as SORA, the CPF Ordinary Account rate (for HDB loans) or the bank's own board rate. Your repayments fall when the reference rate falls and rise when it rises. Banks must usually give 30 days' notice before changing your rate.
Key facts
- Rate
- A reference rate, plus a spread
- Common reference rates
- SORA, the CPF OA rate, or a rate set by the bank (board rate)
- If the reference rate rises
- Your rate and repayment rise
- Notice of change
- Banks must tell you in advance, usually 30 days
- HDB loan
- Pegged at 0.1 percentage point above the CPF OA rate, reviewed quarterly
As of 6 Nov 2026. Source: MoneySense, MAS.
How a floating-rate loan works
Your rate is made up of a reference rate plus a spread. When the reference rate resets, your monthly repayment changes.
| Reference rate | Set by | Used for |
|---|---|---|
| SORA (compounded) | MAS, from interbank transactions | Many bank home loans |
| CPF Ordinary Account rate | CPF Board, quarterly | HDB loans (OA rate + 0.1 point) |
| Board rate | The bank itself | Some bank packages |
MoneySense warns that the main risk of a floating rate is future interest rate rises.
Example
You borrow $800,000 over 25 years at compounded SORA plus 0.7%. These SORA levels are for illustration.
| Compounded SORA | Your rate | Monthly repayment |
|---|---|---|
| 1.3% | 2.0% | $3,390.83 |
| 2.3% | 3.0% | $3,793.69 |
| 3.3% | 4.0% | $4,222.69 |
A two-point rise in SORA adds about $832 a month.
Common mistakes
- Budgeting at today’s rate. Check you could still afford the repayment if rates rose by one or two points.
- Not knowing your reference rate. A board rate can change at the bank’s discretion; a SORA rate follows the market.
- Ignoring the notice. When your bank tells you the rate is changing, review your budget and options.
Frequently asked questions
What is a board rate?
A board rate is an interest rate set by the bank itself. Unlike SORA, it is not a published market benchmark, so ask the bank how it is set and when it can change.
How often does a floating rate change?
It depends on the package. Ask your bank how the reference rate is derived, how often it resets and when it may change.
Is an HDB loan a floating-rate loan?
In a sense. Its rate follows the CPF Ordinary Account rate, which is reviewed quarterly and can't fall below 2.5%, so the HDB loan rate is at least 2.6%.
Related terms
Sources
- How home loans work (MoneySense)
- Buying a property: how much can you afford? (MoneySense)
- Singapore Overnight Rate Average (SORA) (MAS)
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.