Whether you are searching for a new home or simply browsing, chances are you will come across some version of this term: SORA home loan. What is SORA rate, how does it compare with other benchmark interest rates, and what does SORA mean for your home search or refinancing?

In July 2020, a consultation involving the Association of Banks in Singapore proposed that the SIBOR be phased out in three to four years and replaced by the SORA (Singapore Overnight Rate Average).

SORA (which is the Singapore Overnight Rate Average) is the volume-weighted average rate of actual borrowing transactions in the unsecured overnight interbank SGD cash market in Singapore. It is administered by the Monetary Authority of Singapore (MAS), and published at 9am on the next business day in Singapore.

The phrase “volume-weighted average” sounds daunting, but it simply means that the calculations consider the actual amount being lent.


hink of it this way: when calculating SORA, the interest rate for a S$100 million transaction is 5 times more important than the interest rate on a S$20 million transaction.

Why all the fuss over SORA? Well, it is the new benchmark interest rate introduced by the MAS that will replace the Singapore Interbank Offer Rate (SIBOR) and Swap Offer Rate (SOR) when they are phased out by 2024. Even if you have an existing home loan that is pegged to the SIBOR or SOR, you will have to switch over to a SORA-based one if your loan period ends after that.

According to ABS, the transaction-based benchmark is commonly monitored as a reflection of daily conditions in SGD money markets and is underpinned by a deep and liquid overnight funding market, making it a suitable alternative to SOR.

Other benefits of SORA include the fact that it has been published by MAS since 1 July 2005, which means there is a long historical time series that market participants can analyse and use to model trends for risk management, asset-liability pricing and trading purposes. 

Additionally, compounded SORA rates are backward-looking overnight rates, which are considered more stable compared to forward-looking term rates like SOR (and in fact, SIBOR).

Though SORA is new, banks are already launching their SORA-pegged home loans to offer homeowners more home loan choices. Homeowners can expect more options as banks start to explore new SORA-pegged home loans.

About The Author

About The Author

Shamir Wahid

Shamir has more than 8 years of banking experience across various areas in Retail, Corporate and Private banking (including Islamic finance) for one of the largest banks in Southeast Asia. In Corporate Banking, he was involved in structuring loan transactions for real estate developers and REITs. He also worked with private bankers to provide credit solutions to their high net worth clients.