What Is the SORA Rate and Why It Replaced SIBOR: A Complete Guide for Singapore Homeowners

Table of Contents

1. Introduction: Why This Matters in 2025
2. What Is SORA?
3. Why SIBOR Was Replaced
4. How SORA Is Calculated
5. SORA-Based Mortgage Rates: What It Means for You
6. SORA vs. SIBOR: Key Differences Explained
7. Benefits of SORA for Borrowers
8. Limitations and Common Concerns
9. Impact on Existing Homeowners and SIBOR Loans
10. Should You Choose SORA or a Fixed Rate in 2025?
11. Actionable Tips: Getting the Best SORA-Pegged Loan
12. FAQ: SORA and Mortgage Rates in Singapore
13. Common Myths: Debunking Misconceptions About SORA

Why This Matters in 2025 

If you're buying a home, refinancing, or just trying to understand how your monthly instalments are determined, then knowing what SORA is—and why it replaced SIBOR—isn’t optional anymore.

This shift isn't just about a new acronym. It's a fundamental change in how mortgage interest rates are set in Singapore. For homeowners and property investors alike, understanding the new benchmark could save (or cost) you tens of thousands over your loan tenure.

What Is SORA? 

SORA stands for the Singapore Overnight Rate Average. It's published daily by the Monetary Authority of Singapore (MAS), based on actual transactions between banks lending to each other overnight—not on guesswork or projected figures.

Think of SORA as the "real market rate". Because it's transaction-based, it's far more robust, transparent, and less prone to manipulation compared to older benchmarks like SIBOR.

Why SIBOR Was Replaced 

SIBOR (Singapore Interbank Offered Rate) served Singapore's mortgage market for decades. But global events, such as the LIBOR scandal, exposed flaws in quote-based benchmarks:

• Subjectivity: Based on hypothetical quotes
• Volatility: Influenced by speculative sentiment
• Manipulation Risk: LIBOR's downfall triggered worldwide reforms

To align with global best practices, MAS phased out SIBOR entirely by 2024, migrating all mortgages to SORA.

How SORA Is Calculated 

Unlike SIBOR’s single-day rates, SORA mortgages typically use a 3-month compounded average. That means your rate is based on the past 90 days of overnight rates.

This creates a smoothing effect. Even if rates spike one day, they won’t immediately jack up your instalments—giving you more stability.

SORA-Based Mortgage Rates: What It Means for You 

A SORA mortgage is typically structured as: 3M Compounded SORA + Bank Spread

For example:

• 3M SORA = 3.58%
• Bank spread = 0.80%
• Effective interest = 4.38%

Your interest resets every 3 months, based on the average of the previous quarter.

SORA vs. SIBOR: Key Differences Explained

Benefits of SORA for Borrowers

• Greater transparency: You can track it daily via MAS website.
• Smoother repayments: Less impact from short-term rate spikes.
• Aligned with global reforms: Similar to SOFR (U.S.), SONIA (UK), and €STR (Eurozone).

Limitations and Common Concerns

• Backward-looking: It reflects past rates. In a rising rate environment, your loan catches up later.
• Complex to calculate: Average homeowners may not understand the math.
• Less historical depth: Only launched in 2020, so fewer years of data.

Impact on Existing Homeowners and SIBOR Loans 

Still on a SIBOR loan? Your bank should have migrated you to either:

• A SORA-based transitional package
• An internal board rate (less transparent)

Now is a good time to refinance into a transparent SORA-based loan with a lower spread. Use Moshin to compare packages instantly.

Should You Choose SORA or a Fixed Rate in 2025?

Actionable Tips: Getting the Best SORA-Pegged Loan

• Compare spreads: Not all banks offer the same rate.
• Check lock-in periods: 2 to 3 years is standard.
• Use a mortgage broker: Or chat with Moshin to identify your best fit.
• Refinance timing: Consider breakeven costs if you’re switching.

FAQ: SORA and Mortgage Rates in Singapore 

Q: Is SORA lower than SIBOR? A: Historically yes, due to its overnight nature. But both follow broader economic trends.

Q: Can I still get a SIBOR loan? A: No. SIBOR has been fully discontinued since 2024.

Q: How often does SORA reset? A: Most loans reset every 3 months using a compounded 3M average.

Q: What’s better in 2025: SORA or fixed rate? A: Depends on your needs. Fixed rates (~3.9%) provide certainty, while SORA (~4.2%) may drop if global rates soften.

Common Myths: Debunking Misconceptions About SORA 

Myth 1: "SORA is too new to trust."

Reality: It’s backed by MAS and aligned with global standards.

Myth 2: "SORA changes every day—that’s risky."

Reality: Mortgage rates use 3-month averages, not daily rates.

Myth 3: "Fixed rates are always more expensive."

Reality: Not always. It depends on market cycles and bank promotions.

Myth 4: "SIBOR was better."

Reality: SIBOR was less transparent and prone to volatility.

Myth 5: "All SORA loans are the same."

Reality: Banks offer different spreads, features, and lock-in terms.

Still unsure which SORA loan structure is right for you? Chat with Moshin for a personalised comparison across banks and real-time insights into CPF usage, spreads, and projected costs.