SORA has replaced SIBOR and SOR as the benchmark for Singapore dollar home loans, and if your mortgage is still priced off SIBOR, it has almost certainly been converted or is scheduled for automatic conversion. In practice, your floating-rate loan now runs on compounded SORA plus your bank’s margin, sometimes with an adjustment spread layered in from the switch. Check your latest loan letter or your bank’s SORA conversion page today to see exactly which formula applies to you.
TL;DR:
- SORA is transaction-based and backward-looking, so it reflects actual overnight borrowing costs, unlike the forward-looking estimates of SIBOR.
- Most Singapore mortgages now use three-month compounded SORA, which smooths out short-term rate spikes and is reset quarterly.
- Converting from SIBOR to SORA involves an adjustment spread, typically a zero floor; comparing rates without adding this spread can be misleading.
- Banks handled existing SIBOR loans either through a switch package with a fixed spread or automatic conversion using median spreads, often completed by June 2024.
- The real cost of a SORA-based loan includes compounded SORA, bank margin, adjustment spread, and any applicable fees or penalties, not just the headline rate.
Table of Contents
- SORA vs SIBOR: What Each Benchmark Actually Means
- How SORA Is Calculated and What Compounded SORA Means
- Sora Vs Sibor Analysis: Why the Numbers Behave Differently
- The SIBOR-to-SORA Transition Timeline and How Conversion Worked
- Comparing All-In Cost: A Practical Method for Borrowers
- A Property Adviser’s View on SORA-Based Loans
- What Borrowers Keep Getting Wrong About This Switch
- Get Help Comparing Your SORA Loan Package
- Where to Verify the Details Yourself
- Sources
SORA vs SIBOR: What Each Benchmark Actually Means
The two rates measure completely different things, which is why the switch changed how your loan payments behave.
- SORA stands for the Singapore Overnight Rate Average. It’s the volume-weighted average of actual overnight transactions in the unsecured SGD interbank cash market, published daily by the Monetary Authority of Singapore. Because it’s built from real trades that happened the day before, it reflects what banks genuinely paid to borrow from each other overnight.
- SIBOR, the Singapore Interbank Offered Rate, was a panel-based estimate. A group of banks submitted where they believed they could borrow at various terms (one month, three months, six months), and those submissions were averaged into a published rate. It was forward-looking and used for decades in home loans before being phased out.
- SOR, the Swap Offer Rate, was a synthetic rate derived from the US dollar interest rate market combined with the SGD/USD forward exchange rate. It mattered less to retail borrowers but was discontinued alongside SIBOR as part of the same benchmark transition.
The core distinction: SORA is transaction-based and backward-looking, while SIBOR and SOR were estimate-based and forward-looking.
How SORA Is Calculated and What Compounded SORA Means
SORA is calculated from actual interbank trades executed between 8:00 AM and 6:15 PM each business day, then published by MAS at 9:00 AM the next business day as a volume-weighted average. That one-day lag matters. It means the rate you see today reflects yesterday’s market, not a bank’s forecast of tomorrow’s.
Because a single day’s SORA can wobble, banks don’t price loans off the daily print alone. Instead, they use compounded SORA over a set period, most commonly one, three, or six months.
- Compounded SORA takes the daily SORA readings across the chosen window and compounds them, producing a smoother average that better reflects genuine borrowing costs over that tenor.
- Most Singapore mortgages now reference three-month compounded SORA, reset every quarter.
- MAS also documents contingency rules for SORA that apply if transaction volumes on a given day are too thin to produce a reliable rate, ensuring the benchmark keeps functioning even on unusual trading days.
You can track the current daily figure and the compounded series yourself through MAS’s domestic interest rate statistics, which updates every business day.
Sora Vs Sibor Analysis: Why the Numbers Behave Differently
Comparing SORA and SIBOR side by side reveals why your loan quote changed shape, not just size, after the switch.
- Timing of the reset. SIBOR was forward-looking, so a rate hike expectation could get priced in before it actually happened. SORA is backward-looking, so your rate reflects what already occurred, not what the market predicts.
- What’s baked into the rate. SIBOR carried an implicit term and credit-risk premium because banks were quoting a rate for lending to each other over a future period. SORA has no such premium since it’s simply the price of overnight, secured-adjacent trades. This is a big part of why raw SORA often looks lower than SIBOR did at similar points in the rate cycle.
- Volatility. Compounded SORA smooths out short-term spikes across its averaging window, which tends to produce steadier monthly payments than the sharper month-to-month jumps some SIBOR borrowers experienced, according to MoneySense’s consumer guidance.
- The adjustment spread. Because SORA sits structurally lower than SIBOR (no term premium), banks added an adjustment spread when converting legacy SIBOR loans, so borrowers weren’t unfairly bettered or worse off purely from the mechanical rate switch.
Pro Tip: Don’t compare a headline SORA rate directly against your old SIBOR rate. Always add the adjustment spread and margin together before judging whether your new package actually costs more or less.
The SIBOR-to-SORA Transition Timeline and How Conversion Worked
Industry bodies confirmed that SOR and SIBOR were discontinued as primary SGD benchmarks, with the Steering Committee for SOR & SIBOR Transition to SORA (SC-STS) coordinating the multi-year handover on behalf of the industry and MAS.
Banks handled existing SIBOR loans in one of two ways:
- The SORA Conversion Package (SCP), where your existing margin was retained, and your bank applied an adjustment spread calculated either as a spot-average difference between SIBOR and three-month compounded SORA (during active conversion) or a historical median spread if you didn’t act.
- Automatic conversion, which kicked in for borrowers who took no action. Loans that weren’t proactively switched were converted using the historical-median spread methodology, with many banks completing this by June 2024, per guidance from Maybank’s consumer resources.
Crucially, ABS guidance for consumers confirms that SCP conversions carried no additional fee during the active transition window, and adjustment spreads were floored at zero so borrowers couldn’t end up penalized by the mechanics of the switch itself.
Comparing All-In Cost: A Practical Method for Borrowers
Your real cost isn’t the headline SORA number. It’s the full stack: compounded SORA + margin + adjustment spread (if any) + fees or lock-in penalties.
- Pull your current loan letter and identify which compounded tenor (1m, 3m, or 6m) your bank uses and what margin applies.
- Check whether an adjustment spread was added during your conversion, and confirm whether it’s the spot or historical-median figure.
- Model a simple 12-month scenario using today’s published compounded SORA rate, then compare that total against a prevailing package your bank currently advertises.
- Ask directly: is there a lock-in period, a repricing fee, or a penalty for switching before your fixed term ends?
Your decision should hinge less on chasing the lowest headline rate and more on how much monthly volatility you can tolerate against how many years remain on your loan.
A Property Adviser’s View on SORA-Based Loans
Borrowers with three or more years left on their loan often lean toward locking in a fixed-rate package when rates are elevated, simply for payment certainty. Those closer to the end of a fixed term, or comfortable riding out swings, tend to stay on compounded SORA and revisit the numbers each reset.
Where an adviser earns their keep is in the comparison itself: modeling your all-in cost across a SIBOR legacy package, an SCP conversion, and a prevailing bank offer side by side, then timing any switch around your existing lock-in expiry rather than against it. That’s the kind of scenario work we walk through with clients weighing financing options, and it pairs naturally with a broader look at property affordability under current mortgage conditions.
What Borrowers Keep Getting Wrong About This Switch
The conventional advice treats SORA as simply “the new SIBOR,” a relabeling exercise borrowers can mostly ignore. That undersells what actually changed. SIBOR carried a built-in forward guess about future rates; SORA doesn’t guess, it reports. That single shift explains most of the confusion homeowners feel when their payment moves differently than they expected after a rate announcement.
The bigger mistake I see is borrowers fixating on the adjustment spread as if it were a hidden fee designed to disadvantage them. It wasn’t. It exists purely to offset the structural gap between a rate with a term premium and one without, and it was floored at zero for exactly that reason.
What should come first, in my view, isn’t chasing the lowest compounded SORA print of the week. It’s understanding your own tenor, your remaining loan term, and how much monthly variance you can actually absorb before you compare a single number across banks.
— Aman
Get Help Comparing Your SORA Loan Package
Working through compounded tenors, adjustment spreads, and prevailing bank packages on your own can eat a weekend fast, especially when three banks quote the same “SORA plus margin” formula but land on different all-in numbers. A property consultancy can help Singapore buyers and homeowners model those scenarios side by side, comparing what a bank’s SCP conversion actually costs against a prevailing package or a fresh mortgage, so the decision comes down to your numbers rather than a sales pitch.
If you’re refinancing, repricing, or just want a second set of eyes on a loan offer before you sign, see why working with a property consultant pays off, and reach out to start comparing your options this week.
Where to Verify the Details Yourself
For the current daily rate and compounded series, check MAS’s SORA statistics. For conversion mechanics and published spreads, see ABS’s SIBOR transition guidance or your bank’s own consumer FAQ page.
This article is general information, not a substitute for advice from a qualified financial advisor. Consult a qualified financial professional about your own circumstances before acting on anything here.
Sources
- SORA Interest Rate Benchmark
- SIBOR transition to SORA FAQs for consumers (ABS)
- Switching to SORA: What you need to know (MoneySense)
