SORA Rate 2021

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) and the Singapore Interbank Offered Rate (SIBOR). These are benchmark interest rates that banks use to determine the various types of home loans in the market. So although they don’t usually concern the average consumer, home buyers would come across these acronyms while looking at mortgage packages. To help you get started, let’s get you up to speed on what exactly these benchmarks are, what the differences are between SORA and SIBOR, how they affect your home loans and more.

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What Is SORA?

The Singapore Overnight Rate Average (SORA) is an interest rate benchmark, like the Singapore Interbank Offered Rate (SIBOR) and the Singapore Dollar Swap Offer Rate (SOR). Banks use these rates to determine the types of floating-rate housing loans they offer. To have a better understanding of SIBOR , refer to our SIBOR Rate Chart .

Backward-looking interest rate benchmark

SORA, which stands for Singapore Overnight Rate Average, reflects the actual transactions between banks, made between 8am and 6.15pm in Singapore. This means that SORA is based on backward-looking overnight transactions unlike SIBOR or SOR which are based on forward-looking future transactions. All these interest rate benchmarks fluctuate on a daily basis, so if you’re taking a housing loan with your interest rate pegged to them, your loan repayments will change too. However, you can pick a loan package where the interest rate “refreshes” less often — for example, only once every 3 months — for more 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. Similar to SIBOR-linked loans, you’ll need to decide how often you’ll prefer to have your interest rate refreshed. Currently, you can choose between 1-month compounded SORA and 3-month compounded for most SORA loan packages offered in the market. Your interest payments will fluctuate monthly or quarterly, respectively.

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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 will replace SOR and SIBOR by the end of 2021 and 2024 respectively. To understand better, learn more about the differences between SIBOR, SOR and SORA in the article.

Discontinuation of LIBOR

This move towards SORA is due to the fact that the computation of SIBOR and SOR rates utilise the scandal-tainted London Interbank Offered Rate (LIBOR). The scandal involved bankers at some renowned financial institutions who engaged 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 would directly affect 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 includes 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 and less risky than SIBOR or SOR that are based on forward-looking future transactions. Banks will need to replace SOR with SORA by the end of 2021, while the transition from SIBOR to SORA will take place more gradually over the next 3 years.

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 will validate the data and calculate the volume-weighted average rate of all eligible transactions. This derived rate will then be published the following day at 9am on MAS website.

SORA, SIBOR and SOR: What's the difference?

How Do SORA Rates Affect You?

If you’re looking for a home loan, be it refinancing the current home or for a new home, you’ll definitely be considering either fixed or floating rate home loans. Floating rate home loans are mostly pegged to SIBOR and by 2024, SIBOR will be phased out. As we gradually make the transition, more SORA-pegged home loans are being introduced by banks to replace the former SIBOR-pegged loans which were offered to home buyers. Thus, even if you currently have a home loan that is pegged to the SIBOR or SOR, you’ll eventually be switching over to a SORA-based one once your loan period ends, or change to a fixed-rate home loan. You can read more about how SIBOR, SOR and SORA rates will affect your home loans in our blog article.

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Should I Choose SORA-pegged Home Loans?

There have been quite a few SORA-pegged home loans launched by some major banks in Singapore since 2020. Most of these loans follow the 3M SORA (3-Month Compounded Singapore Overnight Rate Average) calculation which is the SORA volume-weighted average rate compounded for 3 months.


This 3M SORA rate is compiled and validated by MAS, and published on MAS website at 9am on the first business day of the relevant month. 


Let’s take a look at some of the SORA-pegged home loan packages available here.

SORA-pegged Home Loans In Singapore

BankRate TypeYear 1 RateYear 2 RateYear 3 Rate & AfterOther Details
OCBC1-month Compounded SORA +1.20% p.a.1.30% p.a.1.40% p.a.

Lock-in period: 1 year

(Free switch to another pricing package after the 1st year. Applicable for new loans only.)

Minimum loan amount: $300,000

(Flexibility to prepay up to 50% of the loan amount in the first 2 years.)

DBS3-month Compounded SORA +1.20% p.a.1.20% p.a.1.00% p.a.

Lock-in period: 2 years

Minimum loan amount: $100,000

Standard Chartered3-month Compounded SORA +1.20% p.a.1.30% p.a.1.40% p.a.

Lock-in period: 2 years

Minimum loan amount: $100,000

UOB3-month Compounded SORA +1.20% p.a.1.30% p.a.1.40% p.a.

Lock-in period: 2 years

Minimum loan amount: $100,000

(Flexibility to prepay your loan or sell your property in the first 2 years.)

Maybank3-month Compounded SORA +0.90% p.a.0.90% p.a.1.40% p.a.

Lock-in period: 1 year

(No lock-in period for BUC properties only.)

Minimum loan amount: $300,000

(Flexibility to prepay up to 50% of the loan amount in the first 2 years.)

Here’s an example to help you understand better: Assuming that you and your partner are keen on taking up a SORA-pegged loan with OCBC and it’s with a tenure of 25 years for a resale HDB flat. 


The 1-month Compounded SORA rate is 0.1227% (as of 8 July 2021) which is the same rate that all banks in Singapore follow for any SORA-pegged home loan packages.


The complete home loan rate is then calculated by adding OCBC’s mark-up (what we call a “spread”) to the SORA rate, and this total interest is what determines your monthly payments.


OCBC’s spread for Year 1 = 1.20%

1-month Compounded SORA = 0.1227%

Total interest in Year 1:

0.1227% (1-month Compounded SORA) + 1.20% (bank’s fixed spread) = approx. 1.33%


Monthly repayments in Year 1 = $1,959.99


In the second year, OCBC’s spread increases to 1.30%, which means that your monthly payment will increase accordingly too.


OCBC’s spread for Year 2 = 1.30%

1-month Compounded SORA = 0.1227%

Total interest in Year 2:

0.1227% (1-month Compounded SORA) + 1.30% (bank’s fixed spread) = approx. 1.43%


Monthly repayments in Year 2 = $1,983.28


At the moment, you can still consider SIBOR-pegged loans alongside SORA-pegged loans. Just bear in mind that SIBOR is being phased out, so you’ll need to transition to another type of mortgage in the next few years.

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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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 there wouldn’t be a need for you to panic should interest rates rise all of a sudden, as you’ll still be paying the same amount regardless of any fluctuations in interest rates. At times, you’ll even get to save more on the monthly instalments during spikes in interest rates. 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. To find out more on how to pick the best home loan for your property in Singapore, you can read our blog article here. However, fixed-rate mortgage rates are often higher than floating rates. But some people don’t mind paying higher mortgage interest rates in exchange for stability.
Most banks offer a selection of floating-rate home loans, pegged to interest rate benchmarks like SORA, SIBOR and SOR. Compared to fixed-rate home loans, floating-rate home loans are more volatile due to fluctuations of the various interest rates. From a home buyer’s perspective, floating-rate home loans are cheaper when interest rates are low, but it is difficult to anticipate changes to the benchmark. Between the 3 floating interest rate benchmarks, SORA is considered the most stable due to its calculation methodology and also because it is compiled and validated by MAS, unlike SIBOR and SOR. By 2024, all floating interest rates will be based on the SORA as SIBOR and SOR get phased out in Singapore.

Frequently Asked Questions

What is the SORA rate now?

The 1-month, 3-month and 6-month compounded SORA rates are currently at 0.1227% p.a., 0.1332% p.a., and 0.1623% p.a. respectively (last published on the Monetary Authority of Singapore (MAS) website on 8 July 2021).

How is the SORA rate derived?

Reporting banks are required to provide data on all 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 calculate the volume-weighted average rate of all eligible transactions, using the formula referring to the SORA Index for the computation of Compounded SORA. This formula is used for the 1-month, 3-month and 6-month compounded 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.

What is the difference between SORA and SIBOR?

SORA is determined by the volume-weighted average rate of borrowing transactions in the unsecured overnight interbank SGD cash market in Singapore, while SIBOR is based on the interest rates at which banks offer to lend to other banks in the unsecured interbank market (how and what future rates which banks plan to borrow at).

When will the SORA rate go up or down in Singapore?

The SORA rate will tend to go up when there's inflation and go down when there’s a recession. It can fluctuate according to other trends and changes in political and economic policies as well.

Is SORA a risk-free rate?

No. Although SORA is based on backward-looking overnight transactions which is less volatile and less risky than SIBOR that is based on forward-looking future transactions, this doesn’t make SORA risk-free.

Is the SORA rate better than SIBOR?

The SORA rate offers more stability than SIBOR due to its calculation methodology and being validated by the the Monetary Authority of Singapore.

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