Beginner's Guide to SORA & Rate Types in Singapore
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Understanding SORA for First-Time Borrowers
What is SORA?
It’s the standard reference for floating-rate home loans, replacing SIBOR and SOR for greater transparency and easier cross-bank comparisons.
Banks use compounded SORA rates (1-month or 3-month averages) to calculate your floating-rate home loan interest. Depending on the tenure, the interest rate “refreshes” either monthly or quarterly, rather than daily.
Hence, the longer the averaging period, the less your monthly payment fluctuates with sudden market changes.
Types of home loan rates: Fixed vs floating
| Fixed home loan | Floating home loan (SORA-pegged) |
|---|---|
|
What is it?
Interest rate stays locked in for an initial period (1–3 years), regardless of SORA movements Once lock-in ends, the rate switches to floating Choose if… You want payment certainty during lock-in period |
What is it?
Fluctuate with market changes Home loan interest rate = Reference rate (1M or 3M SORA) + bank’s fixed spread (an extra margin / percentage decided by lender) Choose if… You’re more comfortable with rate fluctuations for potentially lower costs |
💡 MoneySmart Tip: Why did SORA replace SIBOR & SOR? SORA is more transparent and harder to manipulate than old benchmarks, hence ensuring more consistent rates across lenders.
Key Differences: 1M SORA vs 3M SORA
| Factor | 1-Month SORA | 3-Month SORA |
|---|---|---|
| Adjustment frequency | Monthly | Quarterly |
| Volatility | More volatile and responsive to rate changes | More stable over time |
| Preferred environment | ⬇️ Declining interest rate | ⬆️ Rising interest rate |
| Payment predictability | Less predictable & more frequent adjustments | More predictable and stable repayments over a longer period |
| Risk tolerance | Short-term interest rate fluctuations | More consistent interest rates |
| ⭐ Best for | Declining interest rate environments | Rising interest rate environments |
Overall, 3M SORA loans tend to offer more stable payments for easier budgeting, while 1M 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.
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SORA Rate Table: 2026 Trends
| SORA type | Interest rate (p.a.) |
|---|---|
| 1M SORA | 1.22% |
| 3M SORA | 1.16% |
| 6M SORA | 1.09% |
Disclaimer: SORA rates are accurate as of 27 July 2026 and sourced from MAS Domestic Interest Rates. Rates are updated daily; always refer to official MAS portals for the latest SORA data and trends.
Beginner Tips: How to Choose a Mortgage or Lender For Home Loans
✅ Compare both fixed and floating rates to see which fits your risk appetite and budgeting style. Review your home loan rates regularly depending on the frequency of its interest rate (e.g. 1M SORA rates update monthly, 3M SORA rates update quarterly).
✅ Look at the total spread, not just the headline SORA rate, as the spread determines your final rate.
✅ Check if there are lock-in periods or penalties for refinancing or early repayment.
✅ Leverage trusted home loan comparison tools and professional experts to see side-by-side offers from all major banks in Singapore.
Home Loan Eligibility & Fee Types
Home loan eligibility criteria
| Criteria | Requirement | Rationale |
|---|---|---|
| Total Debt Servicing Ratio (TDSR) | Maximum 55% of gross monthly income | Monthly mortgage repayments cannot exceed 55% of your gross income |
| Mortgage Servicing Ratio (MSR) | Maximum 30% for HDB / EC properties | Monthly mortgage repayment cannot exceed 30% of gross income |
| Minimum annual income | Typically $30,000–$50,000+ | – |
| Age requirement | 21 years and above | – |
| Citizenship / Residency | Singapore Citizen, PR, or eligible foreigner | Foreigners face stricter loan-to-value (LTV) limits and higher stamp duties |
| Credit history | Clean credit record preferred | Late payments, defaults, bankruptcy will affect loan approval or higher interest rates |
| Employment status | Stable income proof required | Provide income documents like payslips, tax returns, financial statements, etc. |
| Property ownership |
|
– |
Note: Monthly debt repayments include new mortgage, credit cards, car loans, and personal loans.
Home loan fee types
| Factor | What to Check | Rationale |
|---|---|---|
| Rate type | Fixed vs Floating (SORA) | Fixed rate offers certainty for 2–3 years; floating adjusts with SORA rate |
| Total interest rate |
Floating: SORA + Bank Spread
Fixed: Locked rate |
Actual borrowing cost; compare total rates, not just SORA or spread alone |
| Lock-in period | Typically 2–3 years | Leaving before lock-in ends triggers penalties; longer lock-ins may offer better rates but less flexibility |
| Partial repayment | Annual cap (10–25%) or unlimited | – |
| Redemption penalty | Standard 1.5% of outstanding loan | Fee charged if you fully repay or refinance before lock-in ends |
| Cancellation Penalty | Typically 1–1.5% | Fee charged if you cancel loan package before disbursement or within specified period |
| Minimum loan amount | $100,000–$300,000 | – |
| Maximum loan tenure |
Up to 30–35 years (age-dependent)
Capped at 65–75 years at loan maturity |
Longer tenure = lower monthly payments but higher interest overall |
| Free conversion / Repricing | After 12–24 months | – |
| Clawback period | 2–3 years | If refinanced early, banks may reclaim legal subsidies or cashback incentives |
How to Apply For HDB & Bank Home Loans: Step-by-Step Guide
Eligibility comparison: HDB loan vs bank home loan
| Feature | HDB Loan (Singaporeans only) |
Bank Home Loan (Singaporeans, PRs, Foreigners) |
|---|---|---|
| Citizenship | Singaporeans only | Singaporeans, PRs (after 3+ years PR status), and foreigners |
| Eligible property types | HDB flats only (BTO, resale) | HDB flats, ECs, private property (condos, landed) |
| LTV Limit | Up to 75% of purchase price or valuation |
1st loan: Up to 75% or 55% 2nd loan: Up to 45% or 25% 3rd+ loan: Up to 35% or 15% |
| Downpayment | 25% of purchase price |
1st loan: 25% • Min. 5% cash (75% LTV) • Min. 10% cash (55% LTV) 2nd loan: 55% • Min. 25% cash 3rd+ loan: 65% • Min. 25% cash |
| CPF OA usage |
✅ Full 25% downpayment ✅ Monthly repayments |
⚠️ Min. 5–25% cash required for downpayment; only remainder via CPF OA ✅ Monthly repayments via CPF OA ❌ Not applicable for foreigners |
| Mortgage Servicing Ratio (MSR) | 30% of gross monthly income | 30% of gross monthly income (for HDB flats and ECs only) |
| Total Debt Servicing Ratio (TDSR) | N/A | 55% of gross monthly income (across all debts) |
| Interest rate type | Fixed (pegged at 0.1% above CPF OA rate; reviewed quarterly) | Fixed or Floating (SORA, board rate, FD-linked) |
| Maximum loan tenure | Up to 25 years |
Up to 30 years (HDB/EC) Up to 35 years (private property) |
| Loan switching | ✅ Can switch to bank home loan anytime | ❌ Cannot switch to HDB loan |
| Early repayment penalty | No penalty | May incur ~1.5% penalty during lock-in period |
| Refinancing flexibility | No fees | May incur fees if within lock-in period |
Disclaimer: LTV limits and downpayment requirements depend on the number of outstanding home loans, property type, loan tenure, and borrower age. MSR applies only to HDB flats and ECs purchased with bank loans. TDSR applies to all bank home loans.
💡 MoneySmart Tip: Although no specific minimum income criteria for mortgages are mandated, local borrowers generally need gross monthly incomes of $2,500–$3,000 to secure a viable loan amount whereas foreigners might need annual incomes of $50,000–$100,000. This requirement may increase if you have existing debt obligations.
Pinpoint your home loan priorities
Consider what matters most:
✔️ Interest rate stability: HDB loans offer predictable 2.6% fixed rates.
✔️ Flexibility & savings: Bank home loans provide competitive rates, refinancing options, and are available for all property types.
✔️ Property type: HDB flat, EC, or private property determines your loan options
Check your eligibility and loan access
Review the eligibility table to confirm:
- Your citizenship status qualifies you for the target loan type
- You meet income and property type requirements
- Your age validity to take up a loan (up to 65–70 years old)
Compare home loan packages
Still unsure which loan type or package fits your financial situation?
Use MoneySmart’s home loan comparison tool to evaluate rates, lock-in periods, and total cost across top banks.
Click either “New Home Loan” or “Refinance Home Loan” to answer a quick questionnaire on your property purchase, income, and financing needs.
Apply for preferred home loan package
Once you’ve shortlisted your preferred bank or HDB loan, submit an In-Principle Approval (IPA) application via Singpass MyInfo to understand your maximum loan amount and affordability.
Required documents:
- NRIC/FIN for Singaporeans/PRs; Valid passport or Employment Pass (EP) for foreigners
- Latest 3–6 months’ payslips or 2 years’ IRAS Notice of Assessment (self-employed)
- 12 months’ CPF contribution history
- Option to Purchase (OTP)/Sale & Purchase Agreement
- Bank account statements (3–6 months)
- Employment letter
⏰ 1–3 business days
Complete property valuation & final approval
After IPA, the bank or HDB will conduct a property valuation to confirm your loan amount.
You may submit additional documents (e.g. sales contract, renovation quotes) to expedite your approval process.
Upon approval, you’ll receive a Letter of Offer to review your loan amount, interest rate, lock-in period, and monthly repayment.
Once satisfied, sign the acceptance form and coordinate with your lawyer to complete the Sale & Purchase Agreement and mortgage registration.
💡 MoneySmart Tip: Most OTPs expire within 2–3 weeks, so time your application to keep it valid throughout the process
⏰ 2–4 weeks total
Loan disbursement and repayment schedule
The bank or HDB will disburse your loan funds directly to you once approved.
Your first monthly repayment will commence according to the agreed schedule.
💡 MoneySmart Tip: Set up GIRO immediately to avoid missing instalments. Late payments hurt your credit score and incur penalties.
FAQs About SORA Rate in Singapore
How is the SORA rate calculated by MAS?
- MAS uses actual SGD overnight unsecured interbank transactions (minimum $1 million) traded between 8am and 6:15pm daily. These are volume-weighted and averaged over 1-, 3-, or 6-month periods, then published at 9am the next day. This transaction-based approach eliminates the speculation risks seen in older benchmarks like SIBOR.
What factors affect SORA rates in Singapore?
- Four main factors affect SORA in Singapore:
- Singapore's economic outlook (GDP, inflation),
- Transaction volume in the interbank market,
- Bank credit quality, and
- Global monetary policy—especially US Federal Reserve decisions.
While SORA is published and fluctuates daily, MAS policy keeps rates relatively stable quarter-to-quarter. So although it is transparent and reliable, it still carries market risks from these factors. Your total interest rate (SORA + bank spread) will also affect your total home loan borrowing cost. Is SIBOR still used for home loans in Singapore?
- No. MAS phased out SIBOR on 31 December 2024 (SOR ended 30 June 2023). All new home loans now use SORA, and all major banks exclusively offer SORA-linked packages.
Can I refinance my home loan before the lock-in period ends?
- Yes, but expect 1.5% redemption penalties (e.g. $7,500 on a $500,000 loan). Banks may also claw back promotional benefits like legal subsidies if you refinance within 2-3 years. Refinancing only makes sense if rate savings exceed penalty costs.
What is a good SORA spread for Singapore home loans?
- A competitive spread ranges from 0.50% to 1.00% in 2026.
If 3M SORA is 2.63% with a 0.80% spread, your total rate is 3.43%. High-value loans ($1 million+) and excellent credit may secure spreads below 0.70%. Always compare total rates, not just spreads. Reach out to our mortgage specialists for the best rates. How much can I borrow for a home loan in Singapore?
- It depends on your LTV ratio (up to 75% for first property), TDSR (max 55% of gross income for all debts), and MSR (max 30% for HDB/EC mortgages). For example: $1 million property = max $750,000 loan at 75% LTV.