SORA-linked home loans have become the default floating-rate mortgage option in Singapore, replacing older benchmarks like SIBOR and SOR. If you are buying a home, refinancing your HDB or private property, or planning your next investment, understanding how a SORA home loan works is now essential.
This complete guide from Homejourney explains SORA in simple terms, breaks down 3M SORA vs 6M SORA, compares SORA vs SIBOR and fixed rates, and shows you how to choose the right package safely and confidently. Throughout, we will highlight how Homejourney helps you compare bank rates, track live SORA, and submit a single application securely to multiple banks.
Table of Contents
- What Is SORA and Why It Matters for Your Home Loan
- How SORA-Linked Home Loans Work in Singapore
- 3M SORA vs 6M SORA: Which Is Better?
- SORA vs SIBOR vs Fixed Rates: Key Comparisons
- Current SORA Levels, Trends and 2025–2026 Outlook
- How Banks in Singapore Price SORA Home Loans
- Choosing Between SORA, Fixed, and Other Floating Packages
- Step‑by‑Step: Using Homejourney to Secure a Safe SORA Loan
- Worked Examples: How SORA Affects Your Monthly Repayments
- Risk Management: How to Protect Yourself with a SORA Loan
- Special Situations: HDB Upgraders, Investors, and Refinancers
- Frequently Asked Questions on SORA Home Loans (Singapore)
Chapter 1: What Is SORA and Why It Matters for Your Home Loan
1.1 Simple definition of SORA (for home buyers)
SORA (Singapore Overnight Rate Average) is the official benchmark interest rate that most Singapore banks now use to price floating home loans.[6] It is the average rate at which banks in Singapore lend SGD to each other overnight, calculated and published by the Monetary Authority of Singapore (MAS).[6]
To make it more stable for homeowners, banks usually use the compounded SORA over 1, 3, or 6 months rather than the single daily rate.[2][6] In practice, almost all SORA home loans today are pegged to 3‑month compounded SORA (3M SORA), with some banks previously offering 1M or 6M structures.[4]
1.2 Why SIBOR and SOR were replaced
For many years, Singapore home loans were based on SIBOR (Singapore Interbank Offered Rate) and SOR (Swap Offer Rate). Both benchmarks have been or are being phased out.[2][4]
- SOR has already been discontinued for retail loans, and borrowers were moved to SORA-based packages.[2]
- SIBOR has been replaced by SORA as the key benchmark for SGD loans.[4]
According to MAS and MoneySense, SORA was chosen because it is based on actual transactions in the overnight interbank market and is considered more robust and transparent than quote-based benchmarks like SIBOR.[2][6]
1.3 Why SORA matters for your monthly instalment
When you take a SORA home loan, your interest rate is usually expressed as:
All-in interest rate = Compounded SORA (1M / 3M / 6M) + Bank spread (margin)
For example, if 3M SORA is 1.2% and your bank’s spread is 1.0%, your total rate is 2.2% p.a.[3][4]
Whenever SORA moves, your monthly instalment will adjust up or down after each reset period (e.g. every 3 months for a 3M SORA package). This is why understanding SORA trends and how often it resets is crucial for budgeting.
Chapter 2: How SORA-Linked Home Loans Work in Singapore
2.1 The mechanics of a SORA home loan
The technical definition from MAS: SORA is the volume‑weighted average rate of all eligible unsecured SGD overnight interbank borrowing transactions between 8am and 6.15pm in Singapore.[6] MAS publishes this daily, and then compounded SORA over 1, 3, or 6 months is calculated from the daily series.[6]
For homeowners, what matters is:
- Reference rate: 1M, 3M or 6M compounded SORA (most banks standardise to 3M).[2][4]
- Bank spread: A fixed margin (e.g. +0.80% to +1.20%) that the bank adds on top of SORA for the life of the loan, except for promotional periods.[1][4]
- Reset frequency: How often the rate is updated (monthly, quarterly, or half-yearly).
2.2 Typical SORA home loan structure in 2025
In 2025, many banks such as DBS, OCBC and UOB price their SORA packages off 3‑month compounded SORA, with slightly different spreads and lock‑in periods.[3][4][8]
A common pattern for owner‑occupied homes:
- Years 1–2: 3M SORA + 0.80% to 1.00%
- Subsequent years: 3M SORA + 1.00% to 1.20%
- Lock‑in: 2 or 3 years
Investment properties typically have slightly higher spreads due to higher perceived risk.[8]
2.3 Insider perspective: How banks update your rate
From practical experience with Singapore banks, here is how it usually works in the real world:
- Rate reset dates are fixed in your Letter of Offer (e.g. first business day of March, June, September, December).
- Banks generally use the compounded SORA rate published a few business days before the reset date.
- Your new instalment amount is automatically recalculated, and you will see the revised deduction in your GIRO or CPF outflow the following month.
If you stay in mature estates like Bishan, Toa Payoh, or Queenstown where resale prices can be higher, changes in monthly instalments of even $200–$300 can significantly affect your budget, especially when combined with higher conservancy, transport, and lifestyle expenses.
Chapter 3: 3M SORA vs 6M SORA – What’s the Difference?
3.1 Definitions
3M SORA is the 3‑month compounded Singapore Overnight Rate Average – the average of daily SORA over a 3‑month window, compounded and annualised.[2][6]
6M SORA (where offered) is the same concept but over 6 months. In practice, Singapore banks have focused mainly on 1M and 3M SORA for retail mortgages, with 6M more common in wholesale markets; however, some banks have previously structured longer reset periods for selected clients.
3.2 Key differences table (featured snippet ready)
3.3 Practical tip: How to choose between 3M and longer reset
From working with borrowers in areas like Punggol, Sengkang, and Tampines where many young families buy new BTOs or ECs, a common pattern is:
- Those with tighter monthly cash flow (e.g. dual‑income couples with childcare and car loans) often prefer less frequent changes to instalments.
- Those with stronger savings buffers and more active interest in markets are usually comfortable with 3M SORA, to gain quicker benefit from rate cuts.
Homejourney’s recommendation is to use our Bank Rates tool to compare live 3M SORA packages across banks first, because that is where the bulk of competitive offers are today. If any bank offers a longer reset structure, it will also show up there.
Chapter 4: SORA vs SIBOR vs Fixed Rates – Key Comparisons
4.1 SORA vs SIBOR
SIBOR vs SORA – short answer:
- SIBOR was a quote‑based interbank offered rate; it has been discontinued for retail loans and replaced by SORA.[2][4]
- SORA is a transaction‑based overnight rate, considered more robust and transparent, and is now the main benchmark for SGD loans.[2][6]
From a homeowner’s perspective in 2025:
- New floating‑rate packages are almost always SORA‑based.
- If you still have an older SIBOR package, your bank should have offered a migration path, often to SORA or fixed.[2]
4.2 SORA vs Fixed‑rate mortgages
Media coverage in 2025 shows that while SORA‑linked loans are attractive, fixed‑rate packages remain more popular, with some banks saying around four in five customers opted for fixed in 2025.[3] This is because most homeowners value the stability of fixed monthly payments, particularly first‑time buyers.
4.3 Comparison table: SORA vs Fixed (featured snippet ready)
Chapter 5: Current SORA Levels, Trends and 2025–2026 Outlook
5.1 Where SORA stands now
In 2023–2025, 3M compounded SORA saw a peak above 3% before easing. By late 2025, CNA reported that SORA had fallen from around 3% in early January to about 1.2%, a three‑year low.[3] The Straits Times also highlighted that 3‑month SORA‑linked floating packages with 3M SORA at about 1.3% became very attractive, prompting more HDB owners to refinance from HDB loans to bank loans.[7]
5.2 Forecasts for 2025 and beyond
Independent mortgage analysts and market watchers suggest that 3M SORA is expected to stay relatively low but not collapse further, broadly following global rate trends and moves by the US Federal Reserve.[1][3][9] Some projections see 3M SORA hovering in the 2%–3% range over the medium term, after the sharp hikes experienced between 2022 and 2023.[1][9]
References
- Singapore Property Market Analysis 6 (2025)
- Singapore Property Market Analysis 2 (2025)
- Singapore Property Market Analysis 4 (2025)
- Singapore Property Market Analysis 3 (2025)
- Singapore Property Market Analysis 1 (2025)
- Singapore Property Market Analysis 8 (2025)
- Singapore Property Market Analysis 7 (2025)
- Singapore Property Market Analysis 9 (2025)
