SORA Linked Home Loans Explained: Quick Overview
A SORA home loan in Singapore is a floating-rate mortgage where your interest cost is calculated as: Compounded SORA (1M / 3M / 6M) + a fixed bank spread. The SORA portion moves with market interest rates, while the spread is set by the bank, so your monthly instalments can go up or down over time.[2][6]
For buyers who find terms like SORA vs SIBOR, 3M SORA, or SORA rate mortgage confusing, this cluster article breaks everything down into practical, decision-focused steps. It supports our main mortgage pillar guide on Homejourney, where you can deep-dive into all mortgage types and long-term planning SORA Home Loans Singapore: Complete 2025 Guide by Homejourney .
What Exactly Is SORA, and Why It Replaced SIBOR
SORA (Singapore Overnight Rate Average) is the volume‑weighted average borrowing rate of overnight funds between banks in Singapore’s interbank market.[6] It is administered and published by the Monetary Authority of Singapore (MAS), and since 2022–2024 it has progressively replaced SOR and SIBOR as the main reference rate for SGD loans.[2][4]
Instead of a single day’s rate, banks use a compounded average of daily SORA over 1, 3 or 6 months to price home loans.[2][4] Because it is averaged over time, a SORA-linked mortgage tends to be less jumpy than a rate that can reset purely on one day’s movement.
From walking around newer launches near Lentor MRT to older estates in Bishan, you will now notice that almost every bank banker at showflats talks about “3M SORA” instead of SIBOR. That is not marketing—it is the new market standard. According to MAS and MoneySense, existing SIBOR and SOR home loans have been or will be fully transitioned out to SORA or other packages.[2][6]
How SORA Home Loans Work (With Simple Math)
Most banks in 2025 quote SORA loans in this format:
Home loan interest = Compounded 3M SORA + Bank spread
For example, a bank might offer:
- Years 1–2: 3M SORA + 0.80%
- Year 3 onwards: 3M SORA + 1.00%
If 3M Compounded SORA is 1.2% (around the level seen in late 2025 after a sharp drop from about 3% earlier in the year[3][7]), your all‑in rate for the first 2 years will be:
1.2% + 0.80% = 2.0% p.a.
On a $600,000 loan over 25 years, a move in SORA from 1.2% to 2.2% (while your spread stays 0.80%) will raise your all‑in rate from 2.0% to 3.0%. That can increase your monthly repayment by a few hundred dollars—manageable for some, stressful for others—so understanding this fluctuation is key before you commit.
Homejourney’s bank rate comparison tool Bank Rates lets you see this clearly across DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Public Bank, Hong Leong Bank, and Citibank, all in one place. You can compare how each bank sets its spread on the same underlying SORA, rather than relying on a single banker’s quote.
3M SORA vs 6M SORA: What’s the Difference?
Most owner‑occupiers in Singapore today choose between 3M SORA and 6M SORA packages. Both use compounded SORA; the key differences are how often the rate resets and how closely they track market moves.
In practice, many banks focus on 3M SORA as their flagship reference because it balances responsiveness and predictability; MAS and widespread industry practice use 3M SORA for many comparisons.[2][4] However, some foreign banks may still price off 6M SORA for borrowers who prefer fewer re‑pricings.
An insider tip from years of sitting with buyers at projects near MRT nodes like Queenstown, Pasir Ris 8, and Lentor: if your income is variable (e.g. commission-based) and you sleep better knowing your instalment will not change too often, a 6M SORA package can psychologically feel more stable, even if the long‑term cost is similar.
SORA vs SIBOR: What Has Changed for Borrowers?
With SIBOR fully phased out by end‑2024, new retail mortgages are no longer offered on SIBOR.[2][4] Instead, banks now use SORA for most floating rate products.
For everyday buyers in Punggol, Tampines or Bukit Batok, the main implication is this: you no longer choose between “SIBOR vs SORA” for new loans. You choose between SORA‑pegged floating, board / fixed‑deposit‑linked floating, or fixed rate packages.
SORA vs Fixed Rate: Which Is Better in 2025?
As of 2025, home loan rates in Singapore are at around a three‑year low. SORA has fallen sharply—from roughly 3% at the start of the year to about 1.2% by mid‑December.[3][7] Fixed-rate packages have also moved down, but many borrowers still favour fixed rates for stability.[3]
