What is SORA and how does it affect my home loan?
SORA (Singapore Overnight Rate Average) is the benchmark interest rate used for floating-rate home loans in Singapore, replacing SIBOR which was fully phased out on 1 January 2024. Your home loan interest rate is expressed as a compounded SORA rate plus a fixed bank spread, meaning your monthly repayments will fluctuate as market conditions change. Floating-rate SORA packages have historically offered lower average rates over the long term compared to fixed-rate options, but they carry interest rate risk.
Last updated: 22 Apr 2026
The Singapore Overnight Rate Average, or SORA, is the benchmark interest rate that underpins most floating-rate home loan packages offered by banks in Singapore. It replaced the previously used Singapore Interbank Offered Rate (SIBOR) following a transition mandated by the Association of Banks in Singapore (ABS) and the Monetary Authority of Singapore (MAS). SIBOR was discontinued on 31 December 2023, and SIBOR was fully phased out on 1 January 2024.
SORA is calculated based on the volume-weighted average rate of actual overnight interbank borrowing transactions in Singapore. It is published daily by the MAS at approximately 9:00 AM Singapore time and is considered a more robust and transparent benchmark because it is derived from real transactions rather than estimated quotes from banks, which was a criticism levelled at SIBOR.
When you take out a SORA-based home loan, your interest rate is typically expressed as a compounded SORA rate (usually the 1-month or 3-month compounded average) plus a fixed spread set by the bank. For example, a bank might offer a rate of 3-month compounded SORA plus 0.80%. As of March 2026, the 3-month compounded SORA stands at approximately 1.07%, meaning an effective interest rate of around 1.87% with a 0.80% spread.
Because SORA moves with market conditions, your monthly mortgage repayment on a floating-rate package will fluctuate. When interest rates fall, your monthly payments decrease, and when rates rise, your payments increase. The frequency of rate resets depends on the specific package - some reset monthly, while others reset quarterly.
This variability introduces interest rate risk, which is why some borrowers prefer fixed-rate packages during periods of uncertainty. However, floating-rate packages tied to SORA have historically offered lower average rates over the long term compared to fixed-rate options.
Understanding how SORA moves and its impact on your repayments is crucial for budgeting. Cashew helps borrowers monitor rate movements and compare SORA-based packages across banks, ensuring you always have access to the most competitive options available.