SORA Linked Home Loans Explained: Complete Guide & Alternatives
SORA linked home loans are floating-rate mortgages pegged to the Singapore Overnight Rate Average (SORA), the key benchmark replacing SIBOR and SOR for Singapore home loans since 2022-2024.
Homejourney helps you safely compare SORA home loan options from DBS, OCBC, UOB and more, ensuring transparent decisions in a trusted environment.
What is SORA and How Do SORA Loans Work in Singapore?
SORA is the volume-weighted average rate of borrowing transactions in Singapore's unsecured overnight interbank SGD cash market, calculated daily by the Monetary Authority of Singapore (MAS) between 8am and 6:15pm.
SORA loan packages use the compounded average of daily SORA rates over 1-month (1M), 3-month (3M), or 6-month (6M) periods, plus a bank spread (typically 0.5-1.5%). This makes rates less volatile than daily resets.
As of late 2025, 3M compounded SORA stands at around 1.2-1.34%, down from 3% earlier in the year, driving lower payments for HDB and private property owners.
For example, a S$500,000 HDB loan at 3M SORA + 0.8% spread yields about S$2,200 monthly—track live rates on Homejourney's Bank Rates for real-time updates.
3M SORA vs 6M SORA: Key Differences for Singapore Borrowers
Most banks like DBS, OCBC, and UOB offer 3M SORA packages, averaging daily SORA over three months for quarterly resets—popular for balancing stability and responsiveness to rate drops.
6M SORA uses a six-month average with semi-annual resets, offering more predictability but slower reaction to falls like the projected drop to 2.6% by end-2025.
3M SORA suits risk-tolerant buyers expecting cuts; 6M fits conservative profiles. Compare current spreads: DBS at 0.65%, CIMB at 0.70% for HDB loans.
Insider tip: For Tengah HDB upgraders, 3M SORA saved one Homejourney user S$300/month versus their old SIBOR loan amid 2025 declines.
| Feature | 3M SORA | 6M SORA |
|---|---|---|
| Reset Frequency | Quarterly | Semi-annually |
| Volatility | Medium | Lower |
| Best For | Rate optimizers | Budget planners |
| Current Rate (Dec 2025) | ~1.2% + spread | ~1.3% + spread |
SORA vs SIBOR: Why SORA Home Loans Dominate in 2025
SIBOR (discontinued end-2024) was forward-looking; SORA vs SIBOR shows SORA's backward-looking compounded method reduces manipulation risk, per MAS guidelines.
All major banks—HSBC, Standard Chartered, Maybank, RHB—now peg to SORA. Existing SIBOR loans auto-converted or refinanced to SORA equivalents.
SORA rates track US Fed cuts closely, hitting 3-year lows at 1.2% p.a., making SORA rate mortgage refinancing attractive for Punggol condo owners facing old 3-4% rates.
Homejourney verifies packages across 11 banks; submit one MyInfo-linked application via Singpass for multiple offers, prioritizing your safety.
Current SORA Home Loan Rates from Top Singapore Banks (2025)
Rates as of December 2025 reflect sharp drops; always check Bank Rates for updates.
DBS: 3M SORA + 0.65% (HDB), 2-3 year lock-in.
OCBC: 3M SORA + 0.70%, popular for fixed alternatives.
UOB: 1M/3M SORA + 0.60-0.80%.
Others: HSBC +0.75%, Citibank +0.68%, CIMB +0.70%.
- Lock-in penalties: 1.5% of outstanding loan if prepaid early—check waivers for partial repayments.
- Refinance tip: HDB owners exempt from TDSR on owner-occupier refis.
- Spread matters: Lower long-term spreads save more, e.g., 0.1% difference = S$10k over 25 years on S$1M loan.
Pros, Cons & Alternatives to SORA Linked Home Loans
Pros: Tracks market falls (e.g., 2025's 1.8% drop), no basis risk vs SOR.
Cons: Rises with global rates; maintain 6-month emergency buffer.
Alternatives: 2-5 year fixed rates (e.g., DBS 2.5-3%), board rates, or FD-pegged—fixed popular with 80% of OCBC buyers for payment certainty.
For investors eyeing Projects Directory , fixed suits stable cashflow; SORA for growth plays. See our SORA vs Fixed guide in the pillar: SORA Home Loans Singapore: Complete 2025 Guide by Homejourney .
Decision Framework: Choosing Your SORA Home Loan
- Assess risk: High tolerance? 3M SORA. Low? 6M or fixed.
- Calculate affordability: Use Homejourney's tool: At 1.2% SORA +0.8%, S$800k condo = S$4,000/month (25 years).
- Compare spreads: Via Bank Rates —one form, multi-bank quotes.
- Time refi: Post-lock-in, amid 2025 declines to 2.6% forecast.
- Consult: WhatsApp Homejourney experts; not financial advice—seek pros for TDSR/ABSD.
Disclaimer: Rates fluctuate; Homejourney verifies data for trust but advises professional review. Link to SORA Linked Home Loans Explained: 2025 Guide by Homejourney for 2025 trends.
FAQ: SORA Linked Home Loans Explained
What is a SORA home loan in Singapore?
SORA loans peg interest to compounded SORA + bank spread, resetting periodically—now at ~1.2-1.34% base for lower payments.
3M SORA vs 6M SORA: Which is better?
3M for faster rate benefits; 6M for stability—compare on Homejourney by property type (HDB/private).
Can I switch from SIBOR to SORA?
Yes, auto-conversion or refi; banks like UOB offer seamless packages—exempt from TDSR for refis.
Are SORA rates expected to rise in 2025?
No, projected declines to 2.6% with Fed cuts—monitor via Bank Rates .
How to get the best SORA loan rates?
Use Homejourney's multi-bank submission for personalized offers from DBS to RHB.
Ready to secure your SORA linked home loans explained complete guide alternatives? Start safely on Homejourney: compare rates, apply once, and explore properties via Property Search . Building trust one verified loan at a time.
Back to pillar: SORA Home Loans Singapore: Complete 2025 Guide by Homejourney SORA Home Loans Singapore: Complete 2025 Guide by Homejourney .
