Stress Test Interest Rate

Rates and thresholds change. The current figures are kept in one place: the Singapore property rules reference.

What it is

The stress test interest rate is not the rate you actually pay. It is a deliberately cautious rate the bank uses behind the scenes to check that you could still afford your mortgage instalment even if interest rates went up from where they are today. This protects both the bank and the borrower from approving a loan that only works while rates stay unusually low.

How it works

Under TDSR rules, banks in Singapore must size your maximum home loan using a stress test rate of 4 percent per year, or your actual quoted rate if that happens to be higher, whichever is greater. This applies even though typical bank mortgage rates in 2026 run well below that, around 1.5 percent per year as an illustrative figure, since rates move over time and this page does not forecast where they will go next. Because the stress test rate is higher than most quoted rates, the loan you are approved for under the 55 percent TDSR ceiling is usually smaller than what a simple calculation using today's actual rate would suggest.

For HDB flats and Executive Condominiums, a similar stress tested approach applies within the tighter 30 percent MSR ceiling for housing repayments specifically, on top of the overall TDSR limit.

A simple worked illustration

On an illustrative gross income of 10,000 dollars a month with no other debt, the 55 percent TDSR ceiling allows up to 5,500 dollars a month toward the new instalment. Stress tested at 4 percent per year over a 25 year tenure, that ceiling supports roughly 1,040,000 dollars of loan. The same 5,500 dollars a month, calculated instead at an illustrative 1.5 percent actual rate, would support a noticeably larger loan on paper, which is exactly why the stress test rate, not the quoted rate, is what determines your real approved amount.

What first time buyers get wrong

• Calculating their own rough affordability using the quoted rate they saw advertised, then being surprised the bank offers a smaller loan.
• Assuming the stress test rate reflects where rates are actually headed, when it is a regulatory floor for assessment purposes, not a rate prediction.
• Not realising the stress test rate applies on top of, not instead of, the 55 percent TDSR ceiling and any 30 percent MSR ceiling for HDB flats and Executive Condominiums.

What to check

Ask your bank to show you the loan amount calculated at the stress test rate, not just the quoted rate, so you know your real approved figure before you commit to a unit. Confirm the current stress test rate and TDSR or MSR ceilings with your bank or MAS, since this page describes the mechanism using the currently published figures and does not forecast future interest rate movements.

Winfred Quek is an Associate Marketing Consultant at Crestbrick Pte Ltd (CEA Licence No. L31010886H). CEA R073319H. This page is for general information only and does not constitute financial, investment, or legal advice. Verify current figures with IRAS, HDB, CPF Board, or MAS before making any decision.