What is SORA and How Does it Affect Your Mortgage: Frequently Asked Questions

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 3M SORA. Administered by the Monetary Authority of Singapore (MAS), it replaced SIBOR and SOR by 2024 for greater transparency and reliability[5][1][2].

This cluster article answers the most common questions from Singapore homebuyers and refinancers on SORA Singapore and its SORA mortgage impact. For our comprehensive pillar guide on Singapore home loans, see Homejourney's full mortgage pillar. Homejourney prioritizes your safety with verified rates and multi-bank comparisons at https://www.homejourney.sg/bank-rates.

SORA Explained: The Basics for Singapore Borrowers

SORA is the volume-weighted average rate of actual borrowing transactions in Singapore's unsecured overnight interbank SGD cash market, calculated from trades between 8am and 6.15pm daily[5][2]. MAS publishes rates at 9am the next business day, ensuring transparency unlike forward-looking SIBOR[1][2].

Banks use compounded SORA—typically 3-month (3M) or 6-month averages—for home loans. For example, 3M Compounded SORA averages daily SORA rates over the past 90 days, making it backward-looking and based on real transactions[1][4]. This affects your mortgage as banks add a spread, like 3M SORA + 0.70% p.a. for UOB's promotional Year 1 rate[3].

The chart below shows recent interest rate trends in Singapore, including 3M and 6M SORA movements over the past 6 months to help you gauge current SORA calculation impacts:

As seen in the chart, SORA has fluctuated with global rates, but Homejourney tracks live 3M SORA and 6M SORA daily on our bank rates page. For deeper insights, read our related article: What is SORA? How It Impacts Your Singapore Mortgage | Homejourney .

How SORA Affects Your Mortgage Payments

Your effective rate is SORA plus a bank spread, which often starts low (e.g., 0.70%-0.80% in Year 1) and rises (e.g., 1.00% after Year 3)[1][3]. For a S$1 million loan at 3M SORA ~3.0% + 0.80% spread, monthly payments could be around S$5,200, but recalculate if SORA rises 0.5%—payments jump ~S$250 monthly.

SORA's backward-looking nature means changes lag actual market shifts by 1-3 months, reducing volatility compared to daily fixes[2]. Under TDSR rules, banks cap debt at 60% of income, so SORA spikes could limit borrowing—e.g., a S$10,000 monthly income family might borrow up to S$1.2M at 4% rates[1].

Actionable tip: Use Homejourney's mortgage calculator at https://www.homejourney.sg/bank-rates#calculator to simulate SORA scenarios. Compare DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and more side-by-side for the best package.

3M SORA vs 6M SORA: Key Differences and When to Choose

3M Compounded SORA: Averages past 90 days; more responsive to rate changes, common for loans (e.g., DBS packages)[2]. Ideal for short-term refinancing if expecting drops.
6M Compounded SORA: Averages past 180 days; smoother but lags more, suiting risk-averse buyers[4].

Choose 3M for flexibility in Singapore's volatile market; 6M for stability. Banks like UOB offer 3M SORA + 0.70% promotional rates with 2-year lock-ins[3]. Insider tip: Refinance post-lock-in via Homejourney's multi-bank submission—apply once via Singpass for offers from all partners.

Practical Steps to Manage SORA Mortgage Impact

Track Rates: Monitor daily on MAS site or Homejourney's real-time tracker at https://www.homejourney.sg/bank-rates.
Calculate Affordability: Input income/debts into our TDSR calculator; stress-test at +2% SORA.
Compare Packages: Review spreads from DBS (3M SORA +0.80%), UOB (+0.70%), OCBC—submit one app for personalized quotes.
Refinance Smartly: If SORA falls, reprice penalty-free after lock-in; Homejourney brokers guide you.
Search Properties: Find HDB/condos in budget at https://www.homejourney.sg/search.

Disclaimer: Rates change; this is not financial advice. Consult Homejourney Mortgage Brokers for personalized guidance. Homejourney verifies all data for your trusted decisions.

Frequently Asked Questions (FAQs)

Q1: What is SORA in simple terms?
SORA is Singapore's overnight interbank lending rate average, published by MAS daily. It's the base for most floating mortgages post-2024 SIBOR phase-out[5][1].

Q2: How does SORA calculation work for my loan?
Banks compound daily SORA over 3M/6M, add spread (e.g., +0.8%). Updated monthly; check Homejourney for live SORA calculation[1][4].

Q3: Will rising SORA hurt my payments?
Yes—1% SORA rise adds ~S$250/month on S$1M loan. Fixed rates offer certainty but higher costs[2]. Track trends on our chart above.

Q4: 3M vs 6M SORA—which is better?
3M reacts faster (good for drops); 6M steadier. Compare bank offers on Homejourney[3][4].

Q5: How to switch to SORA loan?
Existing loans convert at renewal. Refinance via https://www.homejourney.sg/bank-rates—one Singpass app for multi-bank offers.

Ready to secure the best SORA-based mortgage? Visit Homejourney's bank rates page for comparisons, calculators, and applications. Building trust through transparency—one safe loan at a time. For more, explore How Banks Determine Your Mortgage Rate vs Other Banks | Homejourney 2026 .