How the HDB concessionary rate is set

The HDB loan rate is pegged at 0.1 percentage points above the prevailing CPF Ordinary Account interest rate, reviewed quarterly. It has historically been very stable, currently sitting at 2.6% per annum, which is why many buyers value it for predictability even when bank rates dip lower.

How bank rates work

  • Fixed-rate packages lock your rate for an initial period (e.g. 2–3 years), after which it typically reverts to a variable rate.
  • Floating/variable packages are pegged to a reference rate (such as SORA — the Singapore Overnight Rate Average) plus a bank spread, and move with the broader interest rate environment.
  • Lock-in periods restrict penalty-free refinancing or early repayment for a set number of years — read the fine print before signing.
Tip

Don't just compare the headline rate in year one — compare the effective rate across your expected holding period, including what the package reverts to after any fixed or lock-in period ends.

Stress-testing your affordability

Regardless of your actual rate, banks apply a stress-test interest rate floor (roughly 4%) when assessing how much they'll lend you, to ensure you could still service the loan if rates rise. This is why your approved loan quantum may be lower than what your current instalment at today's rate would suggest you can afford.