If you took out a home loan before 2021 and haven’t looked closely at your bank statements since, there’s a good chance the benchmark quietly underpinning your monthly repayments has changed entirely.
Singapore banks have phased out SIBOR (the Singapore Interbank Offered Rate) and SOR (Swap Offer Rate) in favour of SORA, the Singapore Overnight Rate Average. The shift was driven by the Monetary Authority of Singapore as part of a global move away from interbank offered rates, which regulators found were vulnerable to manipulation and increasingly reliant on thin trading volumes.
SORA, by contrast, is calculated from actual overnight interbank borrowing transactions in the Singapore dollar cash market, giving it a broader, more transaction-backed foundation.
For homeowners, this wasn’t just a technical rebranding exercise. It changed how floating rate mortgages behave, month to month and year to year.
What Changed When Singapore Moved to SORA
SIBOR was a forward-looking rate, submitted daily by a panel of banks based on where they expected interbank lending to price. SORA is backward-looking. It’s published each business day based on transactions that have already happened, then typically compounded over a period, such as one month or three months, to arrive at the rate used in a mortgage package.
This distinction matters more than it sounds. A SIBOR-pegged loan moved when the panel’s expectations moved. A SORA-pegged loan moves with what actually happened in the overnight lending market over the compounding window, which means it tends to track the underlying interest rate environment more faithfully, but with less advance warning for the borrower.
By 2021, MAS had set clear timelines for banks to stop issuing new SIBOR-linked loans and to actively convert existing ones, and the transition is now essentially complete across Singapore’s major lenders.
How SORA Actually Works Day to Day
Most SORA-pegged home loan packages in Singapore reference either 1-month or 3-month compounded SORA, plus a bank spread. The published rate resets on a set cycle, so a 1-month SORA package sees its reference rate move monthly, while a 3-month package moves quarterly.
Because SORA compounds daily transactions rather than reflecting a single forward-looking submission, the rate a borrower actually pays in any given period is effectively a rolled-up average of what happened in the overnight market during that window.
This is more transparent in theory. It also means repayments can shift more noticeably within a single reset cycle if overnight rates move sharply, something SIBOR borrowers rarely experienced in the same way.
What This Means for Your Monthly Repayments
For a borrower with a $500,000 outstanding loan, a shift of even 0.5 percentage points in the reference rate can move monthly repayments by roughly $150 to $200, depending on the remaining tenure. Multiply that across a 25 or 30-year loan and the cumulative difference over a lock-in period becomes substantial.
This is why the SORA transition mattered well beyond the mechanics of financial benchmarking. Homeowners on older SIBOR packages who didn’t proactively convert or refinance sometimes found themselves defaulted onto a bank’s board rate, which is typically less competitive than a repriced SORA package would have been.
Fixed vs Floating in a Post-SIBOR Market
The SORA era has also sharpened the fixed-versus-floating decision. Fixed rate packages offer certainty over their lock-in period, useful for borrowers who want predictable repayments regardless of what happens to overnight rates. Floating SORA packages tend to offer lower headline rates and more flexibility to reprice or refinance without penalty once a lock-in period ends, but they carry more exposure to rate movements.
Because mortgage rates in Singapore now move on a transaction-based benchmark rather than a forward-looking submission, timing a refinancing or repricing decision has become more of a live tracking exercise than a once-a-year check-in.
This is one reason more borrowers now work with a mortgage broker such as DollarBack Mortgage, which tracks SORA movements against live promotional packages across Singapore’s 16 major banks and flags when a switch makes financial sense, rather than leaving borrowers to monitor benchmark movements and repricing windows on their own.
What Homeowners Can Do Now
A few practical steps make the SORA transition easier to navigate:
- Check which reference rate your current package is pegged to, and confirm whether you’re still on a legacy structure that could be repriced.
- Compare your bank’s current SORA spread against other packages in the market. Spreads vary meaningfully between lenders.
- Watch your lock-in period closely. Repricing or refinancing just after lock-in ends, rather than months later, avoids paying above-market rates unnecessarily.
- Factor in both the published SORA rate and the bank’s spread. The headline SORA rate is public, but banks price their spread differently, and this is where much of the real competition between packages happens.
Featured image by on Magnific
