For decades, Singapore’s home loan market was anchored to SIBOR and, later, SOR, familiar reference rates for mortgages and corporate borrowing. Yet in recent years, a new acronym has become central to the conversation: SORA, or the Singapore Overnight Rate Average. Today, most floating-rate packages offered by banks in Singapore are SORA-based, marking a major transformation in how interest rates are set locally.

But how did SORA come about, and why did Singapore adopt it?
To answer this, we need to trace the global reset in benchmark interest rates, the limitations of old systems, and the push toward greater transparency and stability.

The Global Backdrop: From LIBOR to Risk-Free Rates

The origins of SORA lie not just in Singapore’s economy, but in global financial reform.

For many years, the world’s most widely used benchmark was LIBOR, the London Interbank Offered Rate. LIBOR influenced everything from mortgages to corporate loans to derivatives. Yet the rate was based on banks’ submissions rather than actual transactions. After manipulation scandals and declining interbank lending volumes, regulators worldwide agreed that a reform was necessary.

This led to the shift towards risk-free reference rates based on real transactions rather than estimates. In the US, SOFR (Secured Overnight Financing Rate) replaced USD LIBOR. In Europe, €STR was introduced. And in Singapore, the Monetary Authority of Singapore (MAS) moved decisively toward SORA.

From SIBOR and SOR to SORA

Before SORA, Singapore primarily used:

As global markets phased out LIBOR, Singapore needed a robust, transparent and locally relevant benchmark.

SORA already existed as a reference rate since 2005, but it was used mostly in financial markets, not consumer mortgages. MAS and industry players recognised its value and gradually transitioned the market:

1. SORA published since 2005
   
   
2. 2019–2020: Advisory groups formalised the transition roadmap
   
   
3. 2021–2022: Banks began offering SORA-based home loans to the public
   
   
4. 2023: SOR fully discontinued; SIBOR phased out progressively in favour of SORA
   
   

Today, SORA is the primary floating-rate benchmark for Singapore home loans.

What Exactly Is SORA?

SORA is the volume-weighted average rate of overnight unsecured lending transactions between banks in Singapore.

In simpler terms, it reflects:

• Actual borrowing cost between banks
  
  
• Based on real SGD overnight transactions
  
  
• No estimation, no manual submissions
  
  
• Published daily by MAS
  
  

Because it is grounded in real, transparent data, SORA reflects true market conditions, making it a more reliable benchmark than older systems.

Why Singapore Adopted SORA

The transition to SORA was driven by several core objectives:

1. Transparency

SORA is calculated from completed, verifiable trades — not opinions or quotes. This reduces manipulation risk and builds trust in the system.

2. Stability

Older benchmarks like SOR were influenced by overseas markets and forex factors. SORA, anchored in SGD money markets, provides domestic stability.

3. Resilience

By aligning with global reforms and adopting a risk-free rate, Singapore strengthened its financial infrastructure and resilience.

4. Fairer Pricing for Borrowers

With SORA, banks price loans in a consistent manner using a transparent benchmark, rather than subjective projections.

How SORA Is Used in Home Loans Today

Most floating-rate mortgage packages today quote:

Compounded 3-month SORA + Bank Spread

The compounding mechanism smooths short-term rate volatility, offering borrowers a more stable reference compared to overnight rates.

Borrowers often notice features like:

• 3-month compounded SORA (revised quarterly)
  
  
• Fixed spread decided by each bank
  
  
• Clear and published rate history
  
  

This transparency gives homeowners greater clarity and confidence when planning mortgage payments.

How SORA Differs from Fixed Rates

Singapore borrowers today often compare SORA packages with fixed-rate loans.

With Singapore’s interest-rate environment evolving, many homeowners use hybrid strategies, for example, choosing SORA now but refinancing into fixed rates later, or vice-versa.

What This Means for Borrowers in 2025 and Beyond

SORA is here to stay. As global interest-rate cycles normalise and markets remain sensitive to inflation data, geopolitical events and central bank policy, SORA continues to offer:

• High transparency
  
  
• Tight regulatory oversight
  
  
• Local market relevance
  
  
• Smooth rate adjustments
  
  

For borrowers, this means more predictable movements than SIBOR/SOR ever offered, and a benchmark aligned with international best practices.

Conclusion: SORA Was Built for a More Transparent and Stable Mortgage Market

SORA did not appear overnight. It was the result of:

• Years of global regulatory reforms
  
  
• MAS’s foresight and planning
  
  
• Singapore banking industry’s collaboration
  
  
• A commitment to transparency and market integrity
  
  

For homeowners, SORA represents a benchmark designed to protect borrowers and strengthen financial stability, a foundation aligned with Singapore’s long-term economic philosophy.

Whether you are choosing between fixed and SORA packages, refinancing, or planning a future purchase, understanding where SORA came from helps you make better decisions.

At Fairloan, we guide clients through these choices every day,  ensuring they select financing aligned with their property goals, risk appetite and personal financial journey.

The Table shows how SORA data fluctuated over the 2 months period from SEP to OCT 2025.

Should you be choosing fixed or floating? 

Lowest Fixed: 1.45% 

Lowest Floating: 1m Sora + 0.28% = est 1.51%

(*Rate updated as of 31 Oct 2025)

Data from MAS website

Singapore Overnight Rate Average (SORA) Table