How Will the Iran War Affect Interest Rates in Singapore? (And What You Should Do With Your Home Loan)

“Should I choose a 2-year or 3-year fixed home loan?
Rates are around 1.5% now… do you think they will go lower given the Iran war?”

This is one of the most common questions we’ve been receiving recently.

But here’s the truth:

👉 You’re asking the wrong question.

Because the real issue isn’t predicting where interest rates will go.
It’s structuring your loan so you’re protected no matter what happens next.

In this article, we break down:

• How the Iran conflict may impact interest rates
• What’s already happening in the market
• Whether you should fix your rate now
• How to decide between 2-year vs 3-year fixed

What’s Happening Right Now?

The Iran conflict is creating uncertainty in global markets.

One key impact:
👉 Rising energy prices → higher inflation risk

When inflation increases:

• Central banks delay rate cuts
• Interest rates stay higher for longer

This directly affects SORA-based home loans in Singapore, which are influenced by global interest rate movements.

But Here’s What Most People Miss

Even before the conflict, rates were already shifting.

Over the past year:

• Interest rates have been trending down
• Many homeowners were waiting for further drops

But this is where risk changes.

As rates fall:

• The upside becomes limited
• The downside risk increases

Recently, we’ve already observed:

• Some banks quietly increasing fixed rates
• Less aggressive pricing compared to earlier months

👉 The Iran conflict doesn’t create the problem — it reinforces an existing trend.

What This Means for Homeowners

If you’re currently on a floating rate:

Your instalment may feel manageable now.
But it is also less predictable.

If inflation persists or worsens:

• Your monthly payments can increase again
• Rate cuts may take longer than expected

Should You Fix Your Interest Rate Now?

This is where most people get stuck.

They ask:

👉 “Should I lock in now, or wait?”

The honest answer:

There is no perfect timing.

Trying to “time the bottom” is how most homeowners end up reacting too late because banks usually adjust rates before the market fully moves.

2-Year vs 3-Year Fixed: Which Is Better?

This is the most common comparison.

2-Year Fixed

• More flexibility
• Ability to refinance earlier
• Better if you believe rates may fall soon

3-Year Fixed

• More stability
• Protection against rate increases
• Better if you want certainty in monthly payments

👉 Right now, we often lean towards 3-year fixed for clients who value stability but it depends on the rate difference and your situation.

If Your Lock-In Is Ending Soon

This is the group that needs to act fast.

Waiting often backfires.

By the time you decide:

• Banks may have already revised rates upward
• You lose the opportunity to secure current rates

👉 Repricing or refinancing early helps you lock in before further changes.

If You’re Still in Lock-In

You’re not completely stuck.

Yes, there may be penalties.
But depending on your situation, there may still be ways to:

• Optimise your loan structure
• Plan ahead for your next move
• Reduce long-term interest cost

👉 This requires proper review, not guesswork.

The Real Answer: It Depends on You

We don’t try to predict interest rates.

Because no one gets it right consistently.

Instead, we structure loans based on:

• Your risk tolerance
• Your future plans
• Your current loan situation

Some clients prioritise flexibility.
Others prioritise certainty.

Both can be correct.

Not Sure What to Do Next?

If your lock-in is ending, or you’re unsure whether to fix your rate

👉 Reach out for a review.

We’ll break down:

• Your current loan
• Available options
• What actually makes sense for your situation

No guesswork. No generic advice.