SORA Rate 2025
As you begin your journey to getting your new home, you may encounter a few terms which are relatively new, such as the Singapore Overnight Rate Average (SORA)*. Previously, we also had Singapore Interbank Offered Rate (SIBOR), but this has since been discontinued from 1 Jan 2025.
In any case, the SORA is a benchmark interest rate used by banks to determine the various types of home loans in the market—which is especially relevant for prospecting homeowners. So if you’re in the market for purchasing a new home, let’s get you up to speed on what exactly SORA is and how it affects your home loans and more.
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What Is SORA?
The Singapore Overnight Rate Average (SORA) is a volume-weighted average borrowing rate—or interest rate benchmark—based on Singapore’s unsecured overnight interbank SGD cash market between 8am and 6.15pm. Actual transactions are used to compute the SORA rate, following international best practices under the IOSCO Principles For Financial Benchmarks.
Banks use these rates to determine the types of floating-rate home loans they offer. They use compounded SORA (over 1-month, 3-month, or 6-month periods) to calculate these interest rates. In contrast, fixed-rate home loans feature interest rates set by banks over a specified period (e.g. 2 to 5 years) and are independent of SORA.
Backward-looking interest rate benchmark
Unlike SIBOR or SOR previously which were based on forward-looking transactions, SORA is based on backward-looking overnight transactions. Basically, it accounts for all the actual overnight interbank lending transactions that have occurred.
And as a backward-looking rate, is purely transactional and does not rely on expectations of future borrowing costs. As a result, no speculation or forecasting is involved—making it more reliable, transparent, and less susceptible to manipulation.
Moreover, banks will use compounded SORA over 1-month, 3-month, or 6-month periods to calculate floating-rate home loans. Hence, this pegs home loans to interest rates that are less volatile and more stable than daily fluctuations. Essentially, you’re picking a loan package where the interest rate “refreshes” less often, like once every 3 months, for greater stability.
Pegged to floating-rate home loan packages
While floating-rate housing loans tend to be less costly than fixed-rate housing loans, the changing nature of your monthly interest repayments is something you’ll have to deal with due to market uncertainties. Currently, the 1-month compounded SORA and 3-month compounded are among the most common SORA loan packages offered in the market. Interest payments will fluctuate monthly or quarterly, respectively.
Fixed-rate vs Floating-rate home loans
Whether you’re planning to refinance or you’ve set your eyes on a new home, you may face a dilemma when deciding to stick to your existing floating-rate home loan or switch to a fixed-rate home loan.
In the meantime, let’s break these terms down to help you gain a better understanding of both floating-rate and fixed-rate home loans.
Fixed-rate home loan
As the word “fixed” implies, this type of loan is more suited for those who are risk-averse due to the stability of fixed rates. This means that even if interest rates suddenly spike, there wouldn’t be a need for you to panic as you’ll still be paying the same amount regardless of fluctuations. At times, you’ll even get to save more on the monthly installments during these spikes.Currently, HDB loans is one of the most renowned fixed-rate home loans for public housing, but many banks do offer fixed-rate loans for HDB flats as well. For those who are interested in getting private properties, there is a variety of fixed-rate and floating-rate mortgages available. However, do note that fixed-rate mortgage rates tend to be higher than floating rates. That said, if you don’t mind paying higher mortgage interest rates in exchange for stability, then go ahead.
Floating-rate home loan
Ever since SIBOR was phased out, most banks now primarily offer a selection of SORA-pegged floating-rate home loans. Compared to fixed-rate home loans, floating-rate home loans are more volatile due to fluctuating interest rates. From a homebuyer’s perspective, while floating-rate home loans are cheaper when interest rates are low, it does have its fair share of difficulties in anticipating changes.
Why is SORA Replacing SIBOR and SOR?
Introduced as the new benchmark interest rate by the Monetary Authority of Singapore (MAS) in August 2019, SORA has replaced SOR since 2021 and SIBOR since 1 Jan 2025. The Steering Committee for SOR & SIBOR Transition to SORA (SC-STS) spearheaded the transition from SOR and SIBOR to SORA—the now standardised, industry-wide interest rate benchmark. To understand better, learn more about what were the differences between SIBOR, SOR and SORA in our article.
| Category | SORA | Swap Offer Rate (SOR) | Singapore Interbank Offered Rate (SIBOR) |
|---|---|---|---|
| Status | Current | Ceased after 30 Jun 2023 | Ceased after 31 Dec 2025 |
| Definition | Average rate of borrowing transactions in the unsecured overnight interbank SGD cash market in Singapore | Cost of swapping USD for SGD | Estimated interest rates for unsecured interbank lending |
| Nature | Backward-looking, based on actual transactions | Forward-looking, based on US interest rates and foreign exchange (FX) movements | Forward-looking, based on interbank lending estimates> Therefore, was more prone to market volatility, sentiment, and speculation |
| Used in home loans? | To calculate more reliable 1-month, 3-month, and 6-month floating-rate home loans | Was commonly used for foreign currency home loans or for homebuyers who wanted greater exposure to USD-linked interest rates | Was commonly used for floating-rate SGD home loans Eventually corrupted by fraudulent rate manipulations |
| Volatility | More stable; compounded over time | Was highly volatile given its USD-SGD FX dependency | Was moderately volatile due to market expectations |
| Administrator | MAS | ABS Benchmarks Administration Co | ABS Benchmarks Administration Co |
| Tenor | Overnight | Overnight, 1-month, 3-month, 6-month | 1-month, 3-month, 6-month, 12-month |
Source: abs.org.sg
Discontinuation of LIBOR
This shift towards SORA is due to the fact that the computation of SIBOR and SOR rates utilised the scandal-tainted London Interbank Offered Rate (LIBOR).
The scandal involved bankers of renowned financial institutions engaging in fraudulent manipulations of the LIBOR. As a result, significant fines and lawsuits were carried out and this incident eroded trust within the financial industry and also the public’s trust in the marketplace.
Global financial benchmarks reform
Previously, banks priced mortgage loans based on SIBOR rate (or SOR when applicable). But as we’ve seen, the unreliable LIBOR directly affected SIBOR- and SOR-linked loans. Thus, the regulatory authorities of many countries including Singapore called for a global reform to improve the robustness and integrity of financial benchmarks.
This included replacing SIBOR and SOR with SORA.
Greater legitimacy
As SORA is calculated based on actual transactions and meets the standards of international best practice, it is regarded as a more legitimate benchmark than its predecessors.
Moreover, it’s based on backward-looking overnight transactions which makes it less volatile, less risky, and less prone to manipulation as compared to SIBOR or SOR that were based on forward-looking future transactions.
How Is SORA Calculated?
Despite SORA being introduced quite recently, its calculation methodology isn’t really new in the financial industry. In fact, it has been used to price certain commercial loans since 2005.
To calculate SORA, banks are required to provide data on all eligible transactions traded and booked in the unsecured overnight interbank market between 8am and 6.15pm.
Thereafter, MAS validates the data and calculates the volume-weighted average rate of all eligible transactions. This derived rate will then be published the following day at 9am on MAS website.
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Considerations: How Do SORA Rates Affect Home Buyers?
With the transition complete, SORA-pegged home loans have now replaced the former SIBOR-pegged floating-rate home loans.
Here are a few ways how the SORA affects home loans in Singapore:
Variable interest rate
Since SORA reflects interbank borrowing costs in Singapore, it is still impacted by broader, global market movements such as liquidity conditions and interest rate expectations. Frequent US Fed rate hikes in the past have led to increased borrowing costs, thereby causing higher floating-rate home loans in Singapore too.
In 2024, the 3-month compounded SORA averaged between 3.50% to 3.62%. Following the ongoing US fed rate-cut cycle, experts predict a similar downward trend, with the 3-month SORA potentially easing to around 2.6% by the end of the year. Consequently, this also naturally leads to SORA-pegged floating-rate home loans becoming relatively more affordable with more predictable repayments.
Although SORA borrowing costs are still higher than pre-pandemic levels (2020-2021), affordability remains relative. It ultimately depends on home buyers’ risk tolerance and financial stability. Also, there’s always a risk of paying more interest throughout your loan’s tenure if market conditions switch to a rising interest rate environment.
Fixed- vs floating-rate home loans
A decline in SORA rates doesn’t always guarantee a corresponding drop in monthly repayments. For SORA-based floating-rate home loans, unexpected market shifts or a slower-than-expected decline in interest could still lead to higher monthly repayments.
In contrast, fixed-rate home loans typically lock in interest between 2.4% to 2.9% for a 2-year package, providing stability against market fluctuations. This in turn ensures predictable monthly repayments, making it easier to manage and plan your finances.
Borrowing compatibility
Borrowers opting for SORA-based loans should have reasonable risk appetite and be tolerant against interest fluctuations. SORA-pegged floating-rate loans usually offer the possibility of lower costs but with the payment variability. Essentially, while current market trends suggest a decline, the converse could also happen where interest rates hike back up. Homebuyers should factor this uncertainty into their budget and financial planning.
Additionally, SORA-based loans are not advisable for those planning to hold the loan for its full tenure. Instead, they are more ideal for those looking to benefit from lower rates and potential refinancing opportunities.
However, if you prefer stability and predictable repayments throughout your home loan, then fixed-rate home loans will be more your speed, regardless of the interest climate,
What’s the Difference Between 1-Month SORA Rates & 3-Month SORA Rates?
As the name suggests, the 3-month SORA benchmark is averaged out over a longer period than 1-month SORA benchmark. If your home loan is pegged to the 3-month SORA, your interest rate is based on the average SORA over 3 months and typically only adjusts once per quarter. In contrast, a 1-month SORA loan adjusts monthly, making it more responsive to market changes.
| Category | 1-month SORA | 3-month SORA |
|---|---|---|
| Duration | Compounded over 1 month | Compounded over 3 months |
| Volatility | Relatively more volatile | Relatively less volatile |
| Preferred environment | ⬇️ Declining interest rate | ⬆️ Rising interest rate |
| Monthly repayment | More frequent adjustments to repayments | More stable repayments over a longer period |
| Risk tolerance | Short-term interest rate fluctuations | More consistent interest rates |
This table illustrates the key differences between 1-month and 3-month SORA. While both have similar margins set by banks, the total interest may vary, with 3-month SORA being relatively higher due to its longer averaging period.
As a result, 3-month SORA loans tend to offer more stable payments for easier budgeting, while 1-month SORA loans tend offer more flexibility and faster adjustments in response to interest rate movements, which may lead to more frequent changes in repayment amounts too.
Is The 1- Month Sora Rate A Better Benchmark Than A 3-Month Rate?
The suitability of the 1-month SORA rate or the 3-month SORA rate benchmark for the home loan that you’ll be getting really depends on various factors and individual preferences. You’ll need to carefully evaluate your financial situation, risk tolerance, and long-term plans before deciding between the 1-month SORA rate and the 3-month SORA rate for your home loan. Here are some aspects to consider when you’re choosing between a home loan that is pegged to a 1-month SORA rate or 3-month SORA rate benchmark.
Interest rate stability
The 1-month SORA rate typically responds to market changes more quickly than the 3-month SORA rate. If you prefer a more responsive interest rate that adjusts more frequently, the 1-month SORA rate may be more suitable. However, this also means that your monthly repayment amounts are likely to fluctuate more often.
Interest rate volatility
The 3-month SORA rate may provide more stability as it is an average rate over a three-month period. This can offer more predictable monthly payments, especially if you prefer fewer adjustments in your loan's interest rate over time.
Loan duration
Consider the duration of your home loan. If you have a shorter loan term or plan to refinance or sell the property in the near future, the 1-month SORA rate might be better due to its flexibility and frequent adjustments. On the other hand, for longer loan terms, the 3-month SORA rate can provide a more stable and predictable rate over a sustained period.
Risk appetite
The 1-month SORA rate may be considered riskier by some borrowers due to its potentially higher volatility. If you prefer a more conservative approach and want to minimize interest rate fluctuations, the 3-month SORA rate could be a more suitable choice.
Should I Choose Fixed or Floating-rate Home Loans?
Whether you’re planning to refinance or you’ve set your eyes on a new home, you may face a dilemma when deciding to stick to your existing floating-rate home loan or switch to a fixed-rate home loan.
In the meantime, let’s break these terms down to help you gain a better understanding of both floating-rate and fixed-rate home loans.
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Frequently Asked Questions
What is the SORA rate now?
- As of 20 March 2025, the current 1-month SORA is around 2.34%, the 3-month SORA is around 2.63%, and the 6-month SORA is around 2.90%.
How is the SORA rate calculated?
- SORA is calculated based on eligible transactions traded and booked in the unsecured overnight interbank market between 8am and 6.15pm in Singapore. MAS will then validate the data and compute the volume-weighted average rate to ascertain the cumulative compounded SORA over time for the 1-month, 3-month, and 6-month SORA rates.
What affects SORA rates?
- SORA rates are affected by several factors including Singapore’s economic outlook i.e. a boom or a recession, the volume of eligible transactions of minimum $1 million from at least 5 reporting banks as the rates are based on the previous day’s transactions and published at 9am the following day, every day. Another factor is the credit profiles of the reporting banks; the lower the credit quality of a bank, the higher the borrowing rate.
How often do SORA rates fluctuate in Singapore?
- Depending on the computation period, SORA rates can change on a monthly (1-month), quarterly (3-month), bi-ennial (6-month) basis.
Is SORA a risk-free rate?
- No, it’s not a risk-free rate. Despite being benchmarked against the overnight unsecured interbank lending rate, it’s subject to other prevailing market conditions too—so it still carries some degree of risk.
For instance, fluctuations in the US fed rate have repercussions on real costs of borrowing for banks globally, which in turn affect SORA. Is SIBOR still relevant?
- No, SIBOR has been phased out since 1 January 2025. SORA is the only benchmark interest rate being used for home loans now.
What's the difference between home loans and home equity loans?
- A home loan (mortgage) is used to finance a property purchase whereas a home equity loan allows you to borrow against the equity you've accumulated in your home, using it as collateral for a separate loan.
Methodology
| SORA | SOR | SIBOR |
|---|---|---|
| Volume-weighted average rate of transactions by Reporting Banks in Singapore to MAS | Volume-weighted average rate of USD/SGD FX swaps | Trimmed arithmetic mean of Contributing Banks’ submissions on expected borrow rates |