If you've been shopping for a home loan in Singapore, you've almost certainly come across the term SORA. It appears in bank rate sheets, MAS announcements, and mortgage advisors' pitches — but what exactly is it, and why does it matter for your mortgage?

What Is SORA?

SORA stands for Singapore Overnight Rate Average. It is a benchmark interest rate published daily by the Monetary Authority of Singapore (MAS), calculated as the volume-weighted average rate of actual overnight borrowing transactions in Singapore's unsecured interbank market.

In simpler terms: SORA reflects what banks are actually paying each other to borrow money overnight. Because it is based on real transactions rather than estimates, it is considered more transparent and robust than the rates it replaced.

Why Did Singapore Move to SORA?

Before SORA, Singapore home loans were mostly pegged to SIBOR (Singapore Interbank Offered Rate) or SOR (Swap Offer Rate). Both have since been discontinued:

  • SOR was retired in 2021 because it relied on USD/SGD foreign exchange transactions, making it vulnerable to external market disruptions.
  • SIBOR was phased out by end-2024, following a global shift away from survey-based benchmark rates (a lesson learned from the LIBOR manipulation scandal).

SORA was chosen as the replacement because it is anchored in real, observable transactions — making it harder to manipulate and more reflective of actual market conditions.

How Do SORA-Linked Home Loans Work?

Most SORA-linked mortgages in Singapore are pegged to 3-Month Compounded SORA (3M Compounded SORA). This is calculated by compounding the daily SORA rates over the past three months.

Your effective interest rate is: 3M Compounded SORA + Bank Spread

For example, if 3M Compounded SORA is 2.80% and your bank's spread is +0.80%, your effective rate is 3.60% p.a.

The spread is fixed by your bank for the duration of the package (typically 2–3 years). The SORA component changes every three months, which means your monthly instalment can go up or down.

Where Can I Find the Current SORA Rate?

MAS publishes the daily SORA rate on their website. The 3-Month Compounded SORA is typically updated on the first business day of each month and can be found at mas.gov.sg.

Key Takeaways

  • SORA is a transaction-based benchmark rate published daily by MAS.
  • It replaced SIBOR and SOR as the standard for floating-rate home loans in Singapore.
  • SORA-linked mortgages have a variable component (the SORA rate) and a fixed bank spread.
  • Your monthly instalment can change when the 3-Month Compounded SORA is repriced, typically every quarter.
  • SORA-linked packages often offer lower spreads than fixed-rate packages, but carry interest rate risk.