SORA Home Loans 2025: What Homeowners Need to Know Now

Remember when your home loan was pegged to mysterious acronyms like SIBOR or SOR? Those days are officially over. As of 2025, Singapore’s mortgage market speaks one language—SORA, the Singapore Overnight Rate Average.

SORA isn’t just another finance buzzword. It’s now the benchmark that underpins nearly every home loan in Singapore, replacing SIBOR (Singapore Interbank Offered Rate) and SOR (Singapore Dollar Swap Offer Rate) after their full retirement. If you’re comparing refinancing offers or wondering why your interest rate looks different from last year, understanding SORA is key.

In this guide, we’ll explain what SORA actually is, why Singapore moved away from older benchmarks, and how this change affects your home loan in today’s higher-rate world.

What is SORA, and how does it work?

SORA stands for Singapore Overnight Rate Average, a benchmark administered by the Monetary Authority of Singapore (MAS). It represents the volume-weighted average borrowing rate—or interest rate benchmark—based on Singapore’s unsecured overnight interbank SGD cash market between 8 am and 6.15 pm. This makes it one of the most transparent and reliable reference rates available today.

Unlike SIBOR, SORA tends to be more predictable and more stable. One reason is that SORA is backward-looking, while SIBOR is forward-looking.

What does that even mean?

Well, SORA measures the volume-rated average of past interbank transactions that have already taken place. In other words, you always know what to expect next month if you bother to check what happened in the past month.

SIBOR, on the other hand, reflects the interest rates that banks have decided to charge in the future. So, it is more unpredictable as banks can hike up or drop interest rates without warning.

The predictability of SORA is even more evident when it comes to the 90-day or 3-month SORA, which home loans are likely to use. This is determined based on the SORA for the past 90 days.

By contrast, the 3-month SIBOR is based on the interest rates banks will be setting 3 months into the future, which is much scarier as you can get hit by unexpected interest rate hikes.

Why did Singapore move away from SIBOR and SOR?

For years, Singapore-dollar loans were tied to SIBOR and SOR. However, both benchmarks had limitations. SIBOR was based on banks’ self-reported borrowing costs rather than actual trades, while SOR was influenced by USD/SGD foreign-exchange markets—which made it volatile and less reflective of local liquidity conditions.

Following the global LIBOR (London Interbank Offered Rate) reform, MAS and the Association of Banks in Singapore (ABS) introduced SORA as a more robust, transparent alternative. The transition took place gradually over several years: SOR was discontinued on 30 Jun 2023, and SIBOR was fully phased out on 1 Jan 2024. Since then, SORA has become the single benchmark rate for all Singapore-dollar loans.

What should you do with your SIBOR mortgage?

If you still had a SIBOR-linked home loan, your bank would’ve automatically converted it to a SORA-based package by the end of 2024. No action needed.

However, if you’re not thrilled with your new rate, you can:

• Refinance with another bank offering a lower SORA spread, or
• Negotiate a repricing with your existing lender (many now allow free or low-fee switches).

The good news? SORA’s structure means rates are less jumpy—so you can expect fewer nasty surprises month to month.

How SORA impacts home loans in 2025

All major banks in Singapore now offer home loans pegged to SORA—usually the 1-month (1M) or 3-month (3M) compounded SORA rate, plus a fixed spread. The spread represents the bank’s margin and typically ranges between 0.6% and 1.0%.

If you take a 1M SORA package, your loan rate adjusts monthly, following market movements more closely. A 3M SORA loan updates quarterly, providing slightly more payment stability. When SORA rises, your instalments increase at the next reset; when it falls, they decrease.

In 2025, SORA has remained fairly steady, mirroring global interest rate trends as central banks gradually ease monetary policy after several years of tightening. Borrowers can still choose between floating-rate SORA packages or fixed-rate loans, depending on their appetite for flexibility versus stability.

What are the SORA-pegged home loans available?

While specific promotions change often, here’s what you’ll typically find in 2025:

Source: Redbrick Mortgage Advisory

Tip: Don’t fixate on spreads alone—also look at lock-in periods, conversion flexibility, and refinancing options. For real-time comparisons, hop over to MoneySmart.

Common SORA myths you should know

If you’ve ever caught yourself comparing loan rates over brunch or scrolling through housing forums late at night, you’ve probably seen a few strong opinions about SORA floating around.

The truth? Some of them don’t hold up. Let’s clear up a few of the most common misconceptions about Singapore’s benchmark rate.

Myth 1: “SORA only goes up.”
False. Like any market rate, SORA fluctuates based on liquidity and monetary policy. It peaked in 2023 but has eased slightly through 2025.

Myth 2: “Fixed rates are always better.”
Not necessarily. Fixed-rate loans provide short-term certainty but can cost more if SORA trends downward. Floating-rate packages may save you money when the market stabilises.

Myth 3: “All SORA loans are the same.”
Nope. Each bank sets its own spread, lock-in terms, and repricing rules—and these differences can significantly affect how much you pay.

By staying informed and reviewing your loan regularly, SORA doesn’t have to be confusing or intimidating. It’s simply the new normal—and, with a bit of smart planning, it can work in your favour.

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