Rates crashed in 2026. Your maximum loan didn’t move.
3-month SORA fell from ~3% to ~1.1% by mid-2026, and fixed packages to ~1.35%. But MAS floors loan affordability at 4% — so cheaper rates cut your monthly bill, not your budget.
Figure 1
What you pay vs what the bank assesses you at
3M compounded SORA, MAS · the 4% medium-term floor has applied since 30 Sep 2022
Falling rates cut your cost, not your ceiling.
Banks size your loan at the higher of 4% or your actual rate, so while SORA sits near 1% your ceiling stays pinned at 4%. TDSR then caps all monthly debt at 55% of gross income, computed at 4% — a couple on ~$14,000/month with no other debt and a 30-year tenure qualifies for roughly $1.6M (vs ~$1.71M under the old 3.5% floor). What actually raises your quantum: higher income, a longer tenure (within age and the 75% LTV cap), and clearing other debt — not a lower advertised rate.
POV Guy take: if you’re waiting for rates to fall so you can borrow more, you’re waiting on a lever that won’t move. Clear other debt and confirm your real ceiling first.
Full breakdown — the data behind it
SORA crashed. Your maximum loan didn't budge.
- 3-month SORA fell from a ~3% peak in early 2025 to about 1.08% by June 2026; fixed packages dropped to roughly 1.35%.
- Your real monthly repayment fell with it — but the loan amount banks will approve barely changed.
- The disconnect confuses almost every buyer who waited for rates to drop.
Falling rates lowered the cost of the loan you already have — not the size of the loan you can get. Those are two different things.
Banks must assess you at 4%, even when you'll pay ~1.3%.
- MAS requires loan serviceability to be tested at a medium-term interest rate floor of 4.0% for residential property (since 30 Sep 2022).
- Banks compute your maximum loan at the higher of 4% or your actual rate — so whenever rates sit below 4%, your ceiling is pinned at 4%.
- The floor is a stability buffer, not your real interest cost.
Until the floor itself changes, sub-4% rates can't expand your borrowing capacity. The advertised rate is irrelevant to your loan ceiling.
All your debt, stress-tested, must fit inside 55% of income.
- TDSR caps all monthly debt repayments at 55% of gross monthly income, computed at the 4% floor.
- Illustration: ~$14,000 combined income, 30-year tenure, no other debt → roughly $1.6M maximum loan at 4%. The same couple would have qualified for ~$1.71M under the old 3.5% floor. (Illustrative; your figures will differ.)
- Car loans, personal loans and guarantees all eat into the same 55%.
Your ceiling is a function of income and existing debt at 4% — not the promo rate. Clearing other debt often raises your property budget more than waiting for rates.
"I'll wait for rates to fall and buy more" doesn't work.
- Lower rates reduce your monthly outlay, improving cashflow on whatever you buy.
- They do not raise the quantum banks approve while SORA is under 4%.
- Buyers who delay for a bigger budget on this logic are waiting for a lever that won't move.
If your goal is a larger loan, falling rates are the wrong thing to wait for. The stress-test floor decides the size; the market rate only decides the cost.
Move the inputs the stress test actually responds to.
- Higher assessable income and a longer tenure (within age and LTV limits) raise the quantum.
- Reducing or clearing other monthly debt frees up TDSR headroom immediately.
- LTV is capped at 75% for a first bank loan; a co-borrower can extend income (but also affects tenure rules).
The path to a bigger approval runs through income, debt and tenure — not through refreshing the rate-comparison sites.
Common questions
Why didn’t my home loan amount increase when interest rates fell in Singapore?
Because banks must assess your loan at a medium-term interest rate floor of 4% (set by MAS since 30 September 2022), not at the current rate. Your maximum loan is computed at the higher of 4% or your actual rate, so while SORA sits around 1% your borrowing ceiling stays pinned at 4%. Lower rates reduce your monthly repayment, but not the quantum the bank will approve.
How is my maximum home loan calculated under TDSR?
Total Debt Servicing Ratio caps all your monthly debt repayments at 55% of gross monthly income, calculated at the 4% stress-test rate. For example, a couple earning about $14,000 a month with no other debt and a 30-year tenure could qualify for roughly $1.6M at 4%. Loan-to-value is separately capped at 75% for a first bank loan. The levers that raise your quantum are higher income, longer tenure (within age limits), and clearing other debts — not a lower advertised rate.