What Is SORA?
Two borrowers can hold identical S$750,000 loans on the same bank's floating-rate package and still see different instalments next month, because the reference rate underneath both packages moves between their reset dates. That reference rate is SORA – the Singapore Overnight Rate Average.
SORA is administered by the Monetary Authority of Singapore (MAS) and published daily (as of 2026-07). Unlike the old SIBOR, which was a panel of banks submitting an estimated rate, SORA is calculated from actual overnight unsecured SGD interbank transactions that took place the previous business day – it is a transaction-based, backward-looking rate rather than a forward-looking estimate.
SIBOR and the Swap Offer Rate (SOR) were phased out as Singapore completed its transition to SORA, and virtually every new floating-rate home loan quoted by a Singapore bank today is pegged to compounded SORA rather than SIBOR. If your existing loan is still SIBOR-pegged, it is a legacy package predating the transition, and you should benchmark it against a current SORA-pegged or fixed-rate offer.
Because SORA is set by actual money-market transactions rather than a bank panel's estimate, it moves in step with system-wide SGD liquidity and global interest rate conditions – which is exactly why your instalment on a SORA-pegged loan is never fixed for the life of the loan the way it is on a fixed-rate package.
Current SORA Rate Trends
Banks do not quote the raw daily SORA figure on your mortgage – they quote a compounded average of it, most commonly compounded over a trailing 1-month or 3-month window, published daily by MAS (as of 2026-07).
1-month compounded SORA averages the daily SORA readings over the trailing month, so it reprices your instalment monthly and reflects the most recent market conditions fastest. 3-month compounded SORA averages over a trailing three-month window, so it reprices quarterly and moves more smoothly – it lags a sudden rate move by design, which cuts both ways: slower to rise, but also slower to fall once rates ease.
Do not rely on a bank's marketing brochure for today's number. MAS publishes the actual daily SORA and the compounded 1-month and 3-month averages directly, updated daily (as of 2026-07) – check it before you compare any two packages, since a 0.1–0.2 percentage point gap in the underlying reference rate compounds into real money over a 25–30 year loan.
When you shop for a package, ask the bank exactly which window it uses and what day of the month your reset falls on – two packages with the same spread over SORA can still produce different instalments in a given month if one resets on the 1st and the other resets mid-month.
How SORA Affects Mortgage Payments
A SORA-pegged home loan package is built from two pieces: the compounded SORA reference rate (1-month or 3-month) plus a fixed bank spread, locked for the package's stated lock-in period (commonly 2–3 years). Your all-in rate is simply reference rate plus spread, and it is this all-in rate that gets run through the standard mortgage amortisation formula each time your package resets.
Monthly instalment = P × r × (1+r)^n ÷ [(1+r)^n − 1], where P = loan amount, r = all-in rate ÷ 12, n = number of monthly instalments
The spread does not change during your lock-in – what changes is the compounded SORA component, which updates on every reset date. A 1-month package recalculates your instalment every month; a 3-month package recalculates every quarter. Either way, the loan is re-amortised over your remaining tenure at the new all-in rate, so a SORA move does not just change next month's payment in isolation – it resets the payment path for the rest of the loan until the next reset.
This is different from funds sitting in your CPF Ordinary Account savings and usage rules, which earn a fixed 2.5% p.a. (as of 2026-07) regardless of what SORA does – only your loan's reference rate floats.
Monthly Payment Impact Calculator
Here is how a SORA move actually reaches your bank account. Say you are a PR who just exercised the option on a S$1,000,000 condo, borrowing the maximum 75% LTV (as of 2026-07) available for a first private housing loan, so your loan is S$750,000 over a 30-year tenure – the maximum private loan tenure. Your bank quotes a 3-month compounded SORA package with a 0.65% spread.
The table below is illustrative only – it is not today's published SORA, since that number changes daily. It shows what your monthly instalment would look like at a few different points the all-in rate could sit at over your loan's life, so you can see how sensitive your payment is to where SORA lands.
| Illustrative 3M compounded SORA | Bank spread | All-in rate | Monthly instalment |
|---|---|---|---|
| 1.85% | 0.65% | 2.50% | S$2,963 |
| 2.35% | 0.65% | 3.00% | S$3,162 |
| 2.85% | 0.65% | 3.50% | S$3,368 |
| 3.35% | 0.65% | 4.00% | S$3,581 |
Between the lowest and highest illustrative scenario above, the instalment swings by S$618 a month – S$7,416 a year – on the same S$750,000 loan, purely from where the reference rate sits, with the spread untouched. Run your own loan quantum and tenure through the mortgage instalment calculator to see your actual sensitivity, and layer in a refinancing cost-benefit comparison before assuming a lower rate elsewhere beats your current package net of legal and valuation fees.
Fixed vs Floating Decision in Current Environment
The headline rate on a floating SORA package often starts lower than a fixed-rate package's rate, which is why floating looks attractive at first comparison – but the comparison that matters is what happens across your full lock-in period, not month one.
| Factor | Fixed-rate package | SORA-pegged floating |
|---|---|---|
| Rate certainty | Locked for the full 2–3 year period regardless of market moves | Resets monthly (1M) or quarterly (3M) with compounded SORA |
| Starting rate | Priced higher than floating at signing | Priced lower than fixed at signing |
| Best fit | You want budget certainty or expect rates to rise | You expect rates to hold or ease, and can absorb resets |
| Exit before lock-in ends | Early redemption penalty applies | Early redemption penalty applies |
Neither choice changes how much the bank will actually lend you. Regardless of your package's quoted rate, MAS requires banks to stress-test your Total Debt Servicing Ratio at a medium-term rate floor of 4.0% (as of 2026-07), capped at 55% of your gross monthly income – so a 2.5% floating quote does not buy you a bigger loan than the stress-tested 4.0% figure allows. Model your actual borrowing capacity with the TDSR calculator before you fall in love with a headline rate.
For the fuller mechanics of choosing between fixed and floating packages, including how promotional first-year rates work and what to negotiate on the spread, see the dedicated fixed vs floating SORA mortgage guide. If your loan is HDB-financed rather than bank-financed, this SORA analysis does not apply – the HDB concessionary loan carries a fixed rate of 2.6% p.a. (as of 2026-07), set with reference to the CPF Ordinary Account rate rather than SORA; check current terms on HDB's housing loan page.
Historical SORA Analysis
SORA has not moved in a straight line. It sat near zero through the low-rate years, then rose sharply as global central banks – led by the US Federal Reserve – tightened policy in a synchronised hiking cycle, before easing back down once that global tightening cycle turned. Singapore, as a small open economy with a currency-centred monetary framework, imports much of this movement rather than generating it domestically.
The lesson for a borrower is less about predicting the next print and more about accepting that a 25–30 year mortgage will live through more than one rate cycle. A borrower who fixed at the peak of a hiking cycle can end up paying above-market once rates ease; a borrower who floated through the trough can get squeezed hard on the way up. Neither outcome reflects a planning failure – it is the nature of holding a multi-decade loan against a rate that is, by design, market-driven.
Do not extrapolate a single quarter of SORA movement into a 25-year forecast. Base your affordability decision on the 4.0% TDSR/MSR stress-test floor (as of 2026-07) that MAS already requires your bank to apply, not on today's compounded SORA reading, which will not hold at today's level for the life of your loan.
MAS Monetary Policy Outlook
Unlike the US Federal Reserve or the European Central Bank, MAS does not conduct monetary policy by fixing a domestic policy interest rate. It manages the Singapore dollar against a trade-weighted basket of currencies within an undisclosed policy band – the S$NEER – adjusting the slope, width, and centre of that band twice a year, in April and October.
Because Singapore is a small, extremely open economy, SORA moves in the same broad direction as global – especially US – interest rates, since capital flows and SGD liquidity conditions transmit those global moves into local money markets even though MAS is not directly setting a policy rate up or down.
Read MAS's semi-annual Monetary Policy Statement for the forward-looking signal rather than a single day's SORA print – it states whether the exchange-rate policy stance is being tightened, eased, or held, which is the closest thing Singapore has to the central-bank guidance that moves mortgage markets elsewhere. The statements and underlying framework are published on MAS's monetary policy pages (as of 2026-07).
Rate Lock Strategy
Turn the mechanics above into a decision process rather than a guessing game about where SORA goes next.
- Pull today's numbers first. Check the current published compounded SORA (1M and 3M) before taking a single bank quote at face value (as of 2026-07) – a spread quoted off SORA is meaningless without knowing what SORA actually is that day.
- Model your worst case, not your best case. Run your loan quantum through the mortgage instalment calculator (linked in the worked example above) at the 4.0% TDSR/MSR stress floor (as of 2026-07), not at the promotional first-year rate, so you know the payment you are actually approved to sustain.
- Compare at least three packages side by side. Spreads over the same SORA window can differ by 0.2–0.4 percentage points between banks – on a S$750,000 loan that is real money over 30 years. A mortgage broker comparison shortcuts this legwork.
- Diarise your reset and lock-in dates. Note both your monthly or quarterly repricing date and the date your 2–3 year lock-in expires – the lock-in date is when you are free to refinance without penalty.
- Revisit two to three months before lock-in expiry. Re-run the numbers through the refinancing calculator (linked in the worked example above) to see whether switching banks beats your existing spread net of legal and valuation costs.
Common pitfalls:
- Comparing only the headline first-year rate and ignoring what the package reverts to once the promotional period ends.
- Assuming a lower SORA-pegged quote raises your loan quantum – it does not, since approval is based on the 4.0% stress-test floor (as of 2026-07) regardless of your actual quoted rate.
- Letting the lock-in period lapse without action, after which most banks move you to a much higher board or reversionary rate.
- Refinancing purely on rate without pricing in legal fees, valuation fees, and any early-redemption penalty still running on the old package.
Frequently Asked Questions
What is the current SORA rate?
There's no fixed answer here — SORA (Singapore Overnight Rate Average) moves daily based on actual overnight interbank lending activity, and no single figure stays accurate for long. Check the current published SORA rate directly from the Monetary Authority of Singapore, which publishes it daily, then add your bank's spread, stated in your loan package, to get your effective mortgage rate. Most packages use a compounded 1-month or 3-month SORA average rather than the raw daily print, so check which tenor your package references.
How much does a 0.5% rate change affect my payment?
A 0.5 percentage point change in your mortgage rate changes your monthly instalment by an amount that scales with your outstanding loan balance and remaining tenure — a larger loan or a longer tenure means a bigger swing in absolute dollars for the same rate change. Because more of your payment is interest early in the loan, the same rate change affects your instalment differently depending on how far along you are, so there's no single number that applies to every borrower. Enter your actual loan amount, tenure and rate change into the mortgage calculator to see your exact new instalment.
Should I lock in a fixed rate now?
Lock in a fixed rate now only if you want certainty over your instalment and believe SORA will hold steady or rise through your intended holding period — otherwise, floating, pegged to SORA, keeps you flexible to reprice without a lock-in constraint if rates fall. Compare the fixed package's rate against the current SORA-plus-spread floating rate: a small gap means fixed is cheap insurance against future increases, a wide gap means you're paying a real premium for certainty. Run both scenarios through the mortgage calculator before committing.