What Are SORA Linked Home Loans?
SORA linked home loans are floating-rate mortgages pegged to the Singapore Overnight Rate Average, a benchmark interest rate that replaced SIBOR on 1 January 2025[1]. Rather than paying a fixed interest rate, your monthly repayments fluctuate based on movements in the 3-month or 6-month compounded SORA, making these loans attractive when interest rates are declining[2].
SORA itself is calculated as the volume-weighted average rate of borrowing transactions in Singapore's unsecured overnight interbank SGD cash market between 8am and 6.15pm[7]. This makes it a transparent, manipulation-resistant benchmark that reflects actual interbank borrowing costs rather than estimates[1].
For Singapore property buyers and refinancers, understanding SORA linked loans is essential because nearly all major banks—DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and others—now price their mortgages using compounded SORA instead of the discontinued SIBOR[4].
Understanding 3-Month SORA vs 6-Month SORA
The key difference between SORA variants lies in their averaging period and how frequently your interest rate adjusts[1]. With 3-month compounded SORA, your interest rate is based on the average SORA over the previous 90 days and typically adjusts quarterly. In contrast, 6-month compounded SORA averages rates over 180 days and adjusts semi-annually[4].
This distinction matters significantly for your monthly repayments. The 3-month SORA is more responsive to market changes, meaning your rate adjusts more frequently—sometimes benefiting you when rates fall, but exposing you to quicker increases when rates rise. The 6-month SORA acts like a temporary fixed rate with a lagging effect, providing more stability and predictable repayments over longer periods[4].
In 2024, the 3-month compounded SORA averaged between 3.50% to 3.62%, but has since fallen dramatically to 1.34% as of December 2025, the lowest level in three years[2][6]. Experts predict the 3-month SORA could ease to around 2.6% by year-end 2026 following the ongoing US Federal Reserve rate-cut cycle[1].
The chart below shows recent SORA trends to help you understand how rates have moved and what this means for your potential monthly payments:
For borrowers, this means choosing between 3-month SORA when you expect rates to decline (capturing savings quickly) or 6-month SORA when you want predictability and protection against sudden rate spikes[4].
SORA Linked Loans vs Fixed-Rate Mortgages
The choice between SORA linked floating-rate loans and fixed-rate mortgages depends fundamentally on your risk tolerance and financial stability[1]. Fixed-rate packages currently lock in interest between 2.4% to 2.9% for 2-year terms, providing certainty that your monthly repayments won't change during the lock-in period[1]. This makes budgeting straightforward and protects you if rates rise unexpectedly.
However, fixed rates don't always decline when market rates fall. If SORA drops significantly, your fixed-rate loan won't benefit from those savings, whereas a SORA linked loan would[1]. In 2025, four in five customers opted for fixed packages, preferring the stability in their repayment amounts[2]. Most homeowners—especially first-time buyers and new homeowners—value budgeting certainty over potential savings[2].
SORA linked loans offer the opposite trade-off: your rate adjusts with market conditions, meaning lower repayments when SORA falls but higher repayments if SORA rises. With current SORA at historic lows, many refinancers are switching to SORA linked packages to capitalize on these lower rates[6]. However, unexpected market shifts or slower-than-expected rate declines could still lead to higher monthly repayments[1].
The practical consideration: if you have tight monthly budgets or plan to stay in your property long-term, fixed rates provide peace of mind. If you have financial flexibility and believe rates will continue declining, SORA linked loans offer better value during downtrends[1].
Current SORA Rates and Market Outlook for 2026
As of January 2026, Singapore's home loan rates are at 3-year lows, with the 3-month SORA at 1.2% to 1.34%[2]. This dramatic decline from 3.50%+ in 2024 reflects expectations for lower US interest rates and improved global liquidity conditions[2].
DBS executives suggest SORA may have already "found a floor," meaning further significant declines are unlikely[2]. Experts at MortgageWise.sg agree that current rates likely reflect most of the expected US easing, barring extraordinary economic shocks[2]. This suggests that while rates could move slightly lower, the major downtrend may be stabilizing.
For 2026, banks are expected to continue offering competitive packages, including legal subsidies and cash rebates, especially in the first quarter when competition for market share intensifies[2]. The three-month SORA is expected to hover between 1.3% and 1.4% by year-end, extending the refinancing tailwind into 2026[6].
This market environment creates an important window for homeowners considering refinancing. HDB flat owners have been refinancing to cheaper bank loans as SORA-linked packages become more attractive than HDB's fixed 2.6% rate[6]. However, timing matters—if you believe rates have stabilized near their lows, locking in current rates makes sense.
How SORA Affects Your Monthly Repayments
Your monthly repayment on a SORA linked loan consists of two components: the compounded SORA rate plus the bank's margin (spread)[1]. If you borrow SGD 500,000 at 3-month SORA + 1.3% margin with current SORA at 1.34%, your effective rate would be 2.64%. When SORA adjusts quarterly, your entire monthly repayment changes accordingly.
The impact on your wallet depends on the loan amount and remaining tenure. On a SGD 500,000 loan with 25 years remaining, a 0.5% rate increase means approximately SGD 200 more per month. Conversely, a 0.5% decrease saves you roughly SGD 200 monthly[1]. Over a year, this compounds to SGD 2,400 in savings or costs.
Since SORA reflects interbank borrowing costs, it's still impacted by broader global market movements, liquidity conditions, and interest rate expectations[1]. Frequent US Federal Reserve rate hikes in the past led to increased borrowing costs and higher SORA rates. The current Fed rate-cut cycle has reversed this trend, benefiting SORA borrowers[1].
The key risk: if global conditions shift unexpectedly—such as inflation resurgence or financial stress—SORA could rise quickly, increasing your repayments without warning. This is why financial stability and risk tolerance matter when choosing SORA linked loans[1].
Benefits of Applying for SORA Loans via Homejourney
Homejourney simplifies the SORA loan application process by consolidating rate information and multi-bank submissions into one trusted platform. Here's how Homejourney's approach prioritizes your safety and success:
- Live SORA Rate Tracking: Track live 3-month SORA and 6-month SORA rates updated daily on Bank Rates . This helps you monitor rate movements and time your application decision when rates are favorable, rather than applying reactively.
- Side-by-Side Bank Rate Comparison: Compare rates from all major banks—DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Public Bank, Hong Leong Bank, and Citibank—in one placeBank Rates . Rather than visiting each bank individually, you see which institutions offer the best rates for your profile.
- Instant Mortgage Calculator: Calculate your borrowing power and monthly repayments instantly with our mortgage calculator on the Bank Rates page. Input your income, existing debts, and loan amount to see affordability before applying.
- Single Application, Multiple Offers: Submit one application via Singpass and receive personalized rate offers from all partner banks. Banks can verify your income and employment data instantly through MyInfo integration, accelerating the approval processBank Rates .
- Verified, Transparent Information: Homejourney prioritizes user safety by verifying all rate information against official bank sources. You can trust that the rates displayed are current and accurate, not outdated or misleading quotes.
- Expert Guidance: When you apply via Homejourney's bank rates page, you connect with our Mortgage Brokers who provide personalized guidance tailored to your financial situation and goals. This human element ensures you understand the trade-offs between 3-month and 6-month SORA options for your specific circumstances.
Step-by-Step: Applying for a SORA Loan via Homejourney
Step 1: Check Your Eligibility Visit Homejourney's Bank Rates page and use the mortgage eligibility calculator. Input your monthly income, existing loan commitments, and desired loan amount. The calculator shows your maximum borrowing power based on Singapore's Total Debt Servicing Ratio (TDSR) rules, which cap monthly debt repayments at 60% of gross income.
Step 2: Compare Current Rates Review the live rate comparison showing SORA + margin offers from all major banks. Note which banks offer the most competitive margins—sometimes 0.1% to 0.2% differences between banks translate to thousands of dollars in savings over your loan tenure.
Step 3: Calculate Your Repayment Use the mortgage calculator to input your preferred loan amount and tenure. See monthly repayment estimates for both 3-month SORA and 6-month SORA options. This helps you assess affordability and understand how rate changes would affect your budget.
Step 4: Submit Your Application Click "Apply Now" on the bank rates page. You'll be guided through a Singpass-verified application that auto-fills your personal and income information from MyInfo. This reduces paperwork and speeds up bank verification.
Step 5: Receive Personalized Offers Within 1-3 business days, banks will contact you with personalized rate quotes based on your credit profile and financial situation. You'll receive offers from multiple banks simultaneously, allowing genuine comparison rather than sequential rejections.
Step 6: Connect with Homejourney Mortgage Brokers Our brokers review your offers, explain the differences between 3-month and 6-month SORA options for your situation, and help you negotiate better terms. They ensure you understand the full implications of your choice before signing.
Who Should Choose SORA Linked Loans?
SORA linked loans suit specific borrower profiles. If you're refinancing an existing HDB or bank loan and believe rates have stabilized near lows, switching to SORA can immediately reduce your repayments. With current 3-month SORA at 1.34% versus HDB's fixed 2.6%, refinancers can save significantly[6].
First-time buyers with strong financial stability and flexible budgets may benefit from SORA loans if they're comfortable with quarterly rate adjustments. You capture the benefit of historically low rates while maintaining flexibility if circumstances change.
Property investors comparing returns across multiple properties might prefer SORA loans because lower interest costs improve rental yield calculations. The transparency of SORA also helps investors forecast cash flow more accurately than opaque SIBOR-based loans[1].
Conversely, avoid SORA loans if you have tight monthly budgets with little flexibility, plan to stay in your property 10+ years and want complete payment certainty, or if you're risk-averse and uncomfortable with rate fluctuations. For these situations, fixed-rate mortgages provide better psychological comfort and financial planning certainty[1].
Common Questions About SORA Linked Home Loans
Can I convert from SORA to fixed rate mid-loan?
Yes, most banks allow conversion after a lock-in period (typically 1-2 years), though some charge conversion fees. Homejourney Mortgage Brokers can explain your bank's specific conversion policies and help time the switch if market conditions change[2].
What happens if SORA rises sharply?
Your monthly repayment increases accordingly. If SORA rises 1%, your repayment increases by approximately SGD 400-500 per month on a SGD 500,000 loan. This is why financial stability and risk tolerance matter—you must afford repayments if rates spike[1].
Is 3-month SORA always lower than 6-month SORA?
Not necessarily. Both track similar underlying rates, but 6-month SORA typically runs slightly higher due to its longer averaging period and additional uncertainty premium[1]. The difference is usually 0.1-0.3%, translating to SGD 50-150 monthly on a SGD 500,000 loan.
Should I apply now or wait for rates to drop further?
Current expert consensus suggests SORA has likely "found a floor" near 1.2-1.4%[2]. Waiting for further declines risks missing the current attractive rates if they stabilize or rise. Homejourney's rate tracking helps you monitor daily movements and decide based on your timeline.
How does Homejourney ensure I get the best rates?
Homejourney's multi-bank submission system ensures genuine competition. Banks know you're comparing offers across competitors, incentivizing them to offer better rates and terms. Our brokers also help negotiate on your behalf, leveraging our platform's credibility and volumeBank Rates .
Making Your SORA Loan Decision with Confidence
Choosing between SORA linked and fixed-rate loans is one of the most significant financial decisions you'll make as a Singapore property owner. The difference between optimal and suboptimal choices can amount to tens of thousands of dollars over your loan tenure.
Homejourney's commitment to user safety means we prioritize verification, transparency, and personalized guidance over quick commissions. When you apply via Homejourney, you're not just accessing competitive rates—you're gaining a trusted partner who verifies information, explains trade-offs clearly, and helps you make decisions aligned with your financial goals.
