After a prolonged period of high borrowing costs, global central banks — led by the U.S. Federal Reserve — have begun cutting rates to support a cooling economy.
In Singapore, this has brought relief to homeowners. Fixed home-loan packages, which hovered around 2.8% in mid-2024, have now dropped to about 1.55%. Likewise, the three-month compounded Singapore Overnight Rate Average (3M SORA) has eased from 3.03% to around 1.33%.
But this isn’t just good news for borrowers — it’s a call to act wisely.
As mortgage rates decline, savvy homeowners are optimising their loans through smarter liquidity management, CPF strategies, and even equity redeployment.
💡 Infographic — Key Shifts in Mortgage Strategies
🏦 Rate Trends
- Fixed rates: 2.8% → 1.55% (mid-2024 to now)
- 3M SORA: 3.03% → 1.33%
- Reflects a clear easing trend in monetary policy.
💧 Liquidity as Leverage
- Offset accounts let cash deposits reduce interest payable.
- Example: $100K deposit offsets ~70% of interest on a $500K loan.
- Keeps cash liquid while reducing effective borrowing cost.
💰 CPF Refund Strategy
- CPF OA funds accrue 2.5% interest.
- Mortgage rates now ~1.55%.
- Refund CPF to earn higher interest — a risk-free ~1% arbitrage.
🏠 Equity Release Opportunities
- Refinance or equity term loan at ~1.6%.
- Redeploy capital into assets yielding 3–4%.
- Builds flexibility and passive income.
🔁 Breaking the Fixed-Rate Lock
- Even with penalties, refinancing can yield net savings.
- Example: $1M loan locked at 2.8% can save ~$10K over 2 years by switching.
🧭 Commentary: Strategy Over Reaction
The most successful homeowners aren’t just chasing lower rates — they’re learning to restructure around the market cycle.
When rates were high, stability mattered most.
Now that rates are falling, flexibility becomes the real edge.
By integrating liquidity planning, CPF optimisation, and equity reallocation, homeowners can turn passive assets into active tools — ensuring every dollar works in sync.
As this rare low-rate window unfolds, the question isn’t “Which bank has the lowest rate?”
It’s “How can my cash, CPF, and property equity work together to support my goals?”
✅ Summary Highlights
✅ Interest rates are easing — fixed loans now around 1.55%.
✅ Liquidity offset accounts reduce interest while keeping cash accessible.
✅ CPF refunds earn more than current mortgage rates.
✅ Releasing property equity can unlock capital for better-yielding assets.
✅ Refinancing — even with penalties — may still deliver savings.
✅ Flexibility is the key advantage in today’s falling-rate environment.
📞 Looking to optimise your home loan or CPF strategy?
Let’s discuss how to align your mortgage and financial plan for the next cycle.