What is SORA?
SORA, or the Singapore Overnight Rate Average, is a key benchmark interest rate used in Singapore's financial markets. It represents the volume-weighted average rate of unsecured overnight interbank SGD transactions in Singapore, published daily by the Monetary Authority of Singapore (MAS).
Understanding SORA Indices
SORA comes in several tenors, each serving different purposes in the financial ecosystem:
- 1M SORA: The 1-month compounded SORA rate, calculated by compounding daily SORA rates over a 1-month period. This is commonly used for short-term floating rate loans and mortgages.
- 3M SORA: The 3-month compounded SORA rate, representing the average compounded rate over a 3-month period. This is widely used as a reference rate for various financial products.
- 6M SORA: The 6-month compounded SORA rate, used for medium-term financial instruments and some mortgage products.
- SORA: The daily overnight rate that serves as the base rate for calculating compounded SORA tenors such as 1M, 3M, and 6M.
Why SORA Matters for Home Loans
SORA has become increasingly important in Singapore's mortgage market, especially as the country transitions away from traditional reference rates like SIBOR (Singapore Interbank Offered Rate). Many banks now offer floating rate home loans that are pegged to SORA, making it essential for homeowners and potential buyers to understand and monitor these rates.
Floating rate mortgages linked to SORA typically add a spread (margin) to the SORA rate. For example, a loan might be priced at "3M SORA + 0.80%". This means your interest rate will fluctuate based on changes in the 3M SORA rate, plus the fixed spread of 0.80%.
How SORA Rates Are Determined
The Monetary Authority of Singapore (MAS) calculates and publishes SORA daily based on actual interbank transactions. The rate reflects real market conditions and is considered more transparent and reliable than previous benchmark rates. The MAS publishes SORA rates at around 9:00 AM Singapore time each business day.
Monitoring SORA Rates
For homeowners with SORA-pegged mortgages or those considering such loans, staying informed about current and historical SORA rates is crucial. Our daily updated SORA rates page provides you with the latest rates for all SORA tenors, along with historical trends to help you make informed decisions about your mortgage.
Whether you're refinancing an existing loan, considering a new property purchase, or simply monitoring market trends, understanding SORA rates can help you navigate Singapore's mortgage landscape more effectively.