What is SORA & Mortgage Impact: Homejourney Benefits
SORA, or Singapore Overnight Rate Average, is the key benchmark for most floating home loans in Singapore, directly influencing your monthly mortgage payments through compounded averages like 3-month SORA. Administered by the Monetary Authority of Singapore (MAS), it replaced SIBOR and SOR by 2024 for greater transparency and reliability[5][1]. This cluster article dives into SORA explained, its mortgage impact, and how Homejourney simplifies applications for safer, trusted financing—linking back to our pillar guide on Singapore home loans for comprehensive coverage.
SORA Singapore Explained: The Basics
SORA is the volume-weighted average rate of actual borrowing transactions in Singapore's unsecured overnight interbank SGD cash market, calculated daily between 8am and 6:15pm[5][4]. MAS publishes rates at 9am the next business day, ensuring transparency unlike forward-looking SIBOR[1]. Banks use compounded versions—1-month, 3-month, or 6-month SORA—for home loans, averaging past daily rates to reduce volatility[2][3].
For Singapore home buyers, this means your interest rate = compounded SORA + bank spread (e.g., 3M SORA + 0.80% p.a. in year 1, rising to +1.00% later)[1]. As of 2026, nearly all major banks like DBS, OCBC, and UOB peg loans to SORA, making it essential for HDB upgraders and private property investors[3].
SORA Mortgage Impact: How It Affects Payments
SORA's backward-looking nature means rates lag market changes: 3M compounded SORA acts like a short-term fixed rate during rises, smoothing hikes, while 1M SORA adjusts faster in falls[3]. For a $1M loan at 3M SORA (say 2.5%) + 0.8% spread, monthly payments hit ~$4,800 under TDSR limits (max 60% of income)[1]. Rising SORA increases payments; e.g., +1% adds ~$350/month.
Homejourney tracks live 3M and 6M SORA rates daily on our bank rates page, helping you time refinancing. For first-time buyers eyeing HDB in Toa Payoh or private condos in Punggol, understanding SORA calculation prevents overborrowing amid 2026 economic shifts.
The chart below shows recent interest rate trends in Singapore:
As seen in the chart, SORA has fluctuated ~2-3% recently, impacting budgets—use Homejourney's mortgage calculator at https://www.homejourney.sg/bank-rates#calculator to model scenarios.
3-Month vs 6-Month SORA: Key Differences
- 3M SORA: Common for mortgages; lags 3 months, preferred in rising rates for stability[3].
- 6M SORA: Smoother but slower to reflect drops; suits conservative investors[2].
- 1M SORA: Quick adjustments, ideal for falling rates but volatile[3].
Banks like HSBC and Standard Chartered offer packages with these; e.g., DBS might price at 3M SORA + 0.7% promo for 2 years[4]. Homejourney compares DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Public Bank, Hong Leong, and Citibank side-by-side for the best fit.
SORA Calculation: Step-by-Step
MAS collects transaction data from reporting banks, validates, and computes daily SORA[5]. Compounded SORA formula: average daily rates over the period, applied monthly[1]. Example: If daily SORA averages 2.8% over 3 months + 0.9% spread = 3.7% effective rate. Check MAS site for historical data; Homejourney integrates this into real-time tools for instant insights.
Insider tip: Refinance before spread hikes (often year 3)—many Toa Payoh HDB owners saved 0.2-0.5% via timely switches in 2025.
Benefits of Applying via Homejourney
Homejourney prioritizes your safety with verified bank partnerships and Singpass integration—submit one application, get personalized offers from all major banks instantlyHow Banks Determine Mortgage Rates in Singapore | Homejourney . No more juggling portals; our platform verifies income/employment data securely, boosting approval odds.
- Compare live rates from DBS to Citibank on https://www.homejourney.sg/bank-rates.
- Calculate payments/eligibility with our free tool.
- Apply via Singpass for 50% faster processing.
- Connect with Homejourney Mortgage Brokers for tailored advice.
- Track SORA trends to lock optimal rates.
For investors eyeing Projects , pair loans with property search at https://www.homejourney.sg/search. Unlike others, we focus on trust: transparent fees, user feedback-driven updates, and no hidden clauses.
Decision Framework: Is SORA Right for You?
| Factor | Choose SORA If... |
|---|---|
| Risk Tolerance | Comfortable with floating rates (lower initial costs vs fixed) |
| Market Outlook | Expect steady/falling rates (SORA lags hikes) |
| Loan Tenure | Long-term (25-30 years); TDSR compliant |
Assess via Homejourney's calculator. Disclaimer: This is educational; consult professionals for advice. For deeper reads, see What is SORA? How It Impacts Your Singapore Mortgage.
FAQ: SORA Singapore Questions
What is SORA in simple terms? SORA is MAS's daily overnight borrowing rate average, used for floating mortgages via compounded periods[5].
How does SORA affect my monthly payments? It sets the base rate + spread; e.g., 3% SORA + 0.8% = higher payments if SORA rises[1].
3M vs 6M SORA: Which is better? 3M for balance, 6M for less volatility—compare on Homejourney[3].
Can I switch to SORA now? Yes, via repricing; Homejourney streamlines multi-bank offers.
Is SORA safer than SIBOR? Yes, backward-looking and transaction-based for reliability[2].
Ready to secure better SORA rates? Start with Homejourney's bank rates comparison today for a trusted, seamless process. Explore our pillar on Singapore mortgages for full guidance.
