SORA Rate: How Singapore’s Key Interest Rate Benchmark Affects Your Loans and Savings
SORA (Singapore Overnight Rate Average) is the volume-weighted average interest rate of unsecured overnight interbank Singapore-dollar cash transactions, published daily by the Monetary Authority of Singapore (MAS). It is the primary benchmark for floating-rate home loans, business loans, and some savings/deposit products in Singapore since replacing SIBOR and SOR.
Not financial advice. All figures for educational reference only. Data as at July 2026. Last updated: July 2026.
Key Takeaways
- SORA has been Singapore’s official interest rate benchmark since SIBOR and SOR were phased out by end-2024, published daily by MAS.
- Most new and refinanced floating-rate mortgages are pegged to compounded SORA (1-month or 3-month), not the daily overnight rate.
- As of early July 2026, the overnight SORA rate was around 1.35%, with 1-month compounded SORA near 1.01% and 3-month near 1.08–1.11%.
- SORA moves in line with the US Federal Reserve’s interest rate cycle and MAS’s monetary policy stance via the exchange rate band.
- A lower SORA generally means cheaper floating-rate mortgage payments, while savings and fixed deposit rates tend to compress as well.
What Is SORA Rate?
SORA replaced SIBOR (Singapore Interbank Offered Rate) as Singapore’s benchmark interest rate following a global shift away from LIBOR-style benchmarks after 2022. Unlike SIBOR, which was based on bank quotes/estimates, SORA is calculated from actual overnight interbank transaction data, making it a more transaction-based and robust benchmark. MAS publishes SORA daily by 9am the next business day, and banks derive ‘compounded SORA’ rates (1-month, 3-month) by compounding the daily overnight rate over the relevant period — this compounded figure is what most home loan packages actually reference.
How Does SORA Rate Work in Singapore?
A typical SORA-pegged home loan package is quoted as, for example, ‘3M compounded SORA + 0.65% spread’. Your monthly instalment resets periodically (monthly or quarterly, depending on whether it’s pegged to 1M or 3M SORA) as the compounded SORA rate moves. Because compounded SORA is backward-looking (it compounds realised daily rates over the period), it moves more smoothly than a forward-looking rate would, but it still lags real-time rate cuts or hikes by roughly the compounding window length. Banks also use SORA as a reference for some savings account bonus interest tiers and business loan pricing.
SORA Rate Example
Jun Wei takes a S$800,000 HDB loan on a package pegged to ‘3M compounded SORA + 0.70%’. With 3M compounded SORA at approximately 1.08% in July 2026, his effective mortgage rate is about 1.78% p.a. If SORA falls to 0.80% over the next year as rates ease further, his effective rate would drop to roughly 1.50% p.a. — lowering his monthly instalment automatically without refinancing, since the loan reprices with the benchmark.
Advantages of SORA Rate
- Transparent and transaction-based — SORA reflects real overnight trades, reducing the manipulation risk associated with older quote-based benchmarks.
- Automatically reflects rate cuts — borrowers on SORA-pegged loans benefit from falling rates without needing to refinance.
- Widely adopted — virtually all new floating-rate mortgages and many business loans in Singapore now use SORA, simplifying comparison across banks.
- Published daily and freely available — MAS publishes SORA data openly, making it easy to track and verify.
Risks and Limitations
- Rate volatility cuts both ways — a SORA-pegged loan also gets more expensive automatically if rates rise, unlike a fixed-rate package.
- Compounding lag — because compounded SORA looks backward over 1 or 3 months, your rate doesn’t reflect the very latest overnight rate immediately.
- Spreads vary by bank — the ‘SORA + spread’ structure means comparing headline SORA alone is misleading; the bank’s spread and any step-up structure matter just as much.
- Refinancing penalties — locking into a SORA package still typically carries a lock-in period with early redemption penalties, same as other mortgage types.
SORA vs Fixed Deposit Rate Home Loans
Singapore banks offer both SORA-pegged and fixed-rate (or FD-pegged) home loan packages — the right choice depends on your risk tolerance for rate movements.
| Aspect | SORA-Pegged Loan | Fixed-Rate Loan |
|---|---|---|
| Rate basis | Compounded SORA (1M/3M) + bank spread | Fixed rate set for 1–5 years, then reverts to a floating reference |
| Rate movement | Resets monthly/quarterly with the market | Locked for the fixed period regardless of market moves |
| Best when rates are… | Expected to fall | Expected to rise or you want payment certainty |
| Transparency | High — published daily benchmark | Lower — bank sets the fixed rate internally |
| Typical use case | Rate-sensitive borrowers, refinancers | Borrowers prioritising predictable monthly instalments |
The Bottom Line
SORA is now the backbone of Singapore’s floating-rate lending market — understanding how compounded SORA translates into your actual mortgage or business loan rate helps you compare packages properly and anticipate how your instalments will move as MAS’s monetary policy and the US rate cycle evolve.