Mortgage & Financing · 2026
SORA explained: how Singapore's floating rate benchmark works
By Winfred Quek · 10-minute read · Last reviewed May 2026
Facts verified: May 2026 · Sources linked below
Key Takeaways
- • SORA is the Singapore Overnight Rate Average, the benchmark rate published by MAS, based on actual overnight interbank Singapore-dollar lending transactions.
- • A floating mortgage rate is compounded SORA (commonly 1-month or 3-month) plus a fixed bank margin. The SORA part moves; the margin is set by your loan contract.
- • Compounded SORA is a backward-looking average over a past period, which smooths out day-to-day volatility compared with a single overnight rate.
- • SORA replaced SIBOR because it is transaction-based rather than estimate-based, in line with a global move away from survey-based benchmarks.
- • For the current SORA value, consult the MAS website directly. SORA changes over time and should not be quoted from a static figure.
If you are choosing between a fixed-rate and a floating-rate home loan in Singapore, you will see the floating packages quoted as "SORA + a margin". Most buyers nod along without really knowing what SORA is. It is worth understanding, because SORA is the engine that drives the floating part of your monthly instalment, and the way it is constructed has real consequences for how your repayment behaves.
What is SORA?
SORA stands for Singapore Overnight Rate Average. According to the Monetary Authority of Singapore, which administers and publishes it, SORA is the volume-weighted average rate of unsecured overnight interbank Singapore-dollar lending transactions. In plain terms: when banks lend Singapore dollars to one another overnight, SORA is the average rate they actually charged, weighted by how much was lent.
The key word is "actually". SORA is computed from real, completed transactions. It is not a prediction, an estimate, or a survey of what banks think a rate should be. It is a record of what happened in the overnight money market on a given day. According to the Monetary Authority of Singapore, which administers and publishes SORA, the rate is released on each business day.
How does SORA feed into a floating mortgage?
Your floating home loan rate has two parts:
Your effective interest rate is the sum of the two. So if a package is "3-month compounded SORA + a margin", your rate rises and falls with SORA while the margin stays constant. When you compare two floating packages, you are really comparing their margins and how the margin steps over time, because the SORA part is identical for everyone.
What does "compounded" SORA mean, and why 1-month versus 3-month?
SORA itself is a daily overnight rate. Lenders do not reprice your mortgage every single day against yesterday's overnight number, that would be extremely volatile. Instead they use compounded SORA: the daily SORA values are compounded together over a recent period to produce a single rate.
1-month compounded SORA averages the daily SORA over the past month. 3-month compounded SORA averages over the past three months. Both are backward-looking, they tell you what overnight rates have done recently.
| Feature | 1-month compounded SORA | 3-month compounded SORA |
|---|---|---|
| Averaging window | Past 1 month of daily SORA | Past 3 months of daily SORA |
| Responsiveness to rate changes | Quicker to reflect movements | Slower, more smoothed |
| Repricing frequency | Typically monthly | Typically quarterly |
| Behaviour in a rising-rate period | Climbs sooner | Lags, climbs later |
| Behaviour in a falling-rate period | Falls sooner | Lags, falls later |
The choice between 1-month and 3-month is mostly about how quickly you want your rate to track the market. Confirm which tenor a package uses with the bank.
The trade-off is simple. The 1-month version tracks the market more closely, so it adjusts faster in both directions. The 3-month version is smoother and slower, it lags movements either way. Neither is inherently better; it depends on whether you prefer your instalment to respond quickly or gradually.
How is SORA different from the old SIBOR?
For years, Singapore floating mortgages were priced off SIBOR, the Singapore Interbank Offered Rate. SIBOR was a forward-looking rate based on banks submitting estimates of the rate at which they believed they could borrow. SORA is fundamentally different.
- Transaction-based, not estimate-based. SORA reflects real overnight lending that took place. SIBOR relied on banks' submitted estimates, which were more open to question.
- Backward-looking, not forward-looking. Compounded SORA averages what already happened. SIBOR projected forward.
- Part of a global shift. The move from SIBOR to SORA mirrors a worldwide transition away from survey-based benchmarks toward transaction-based ones, undertaken to make benchmark rates more robust and harder to distort.
The practical upshot for borrowers: SIBOR has been discontinued, and floating Singapore mortgages are now priced against SORA. If you took out a SIBOR loan in the past, it would have been transitioned. New floating packages are SORA-based.
Winfred's Take
The most useful thing to internalise is that SORA is not something the bank controls, it is a published market rate, the same for every lender. So when a bank "competes" on a floating package, it is competing on the margin and on how that margin steps up over time, not on SORA. That changes how you should shop. Do not be dazzled by a low headline rate; ask what the margin is, whether it steps up after a year or two, and which tenor, 1-month or 3-month, the package uses. I also tell clients not to fixate on a single SORA number they read somewhere. SORA moves. The right place to see today's level is the MAS website, and the right question is how your instalment behaves across a range of SORA outcomes, not at one point in time.
Should you choose a SORA floating loan or a fixed-rate loan?
That is a separate decision, covered in detail in the guide on SORA versus fixed mortgages. In short: a floating SORA loan lets your rate move with the market, which helps if rates fall and hurts if they rise; a fixed-rate loan gives you certainty for the fixed period at the cost of not benefiting from any fall. In 2026 both fixed and floating packages sit at around 1.5%, so the choice is less about today's rate and more about your view on rate direction and your appetite for fluctuation in your monthly payment. Either way, the bank stress-tests your loan at the 4.0% TDSR floor rate.
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Winfred Quek · CEA R073319H · Crestbrick
Frequently asked questions
What is the current SORA rate?
SORA changes over time, so it should not be quoted from a fixed figure. The Monetary Authority of Singapore publishes SORA, including 1-month and 3-month compounded SORA, on its website. Check there for the current level before relying on any number.
Who decides the SORA rate?
Nobody sets SORA by decision. It is computed by MAS from actual overnight interbank Singapore-dollar lending transactions and published each business day. It reflects the market, not an administrative choice.
Why is my floating rate higher than SORA?
Your floating rate is compounded SORA plus a fixed bank margin. The margin is the bank's spread, set in your loan agreement. SORA is the moving benchmark; the margin is what makes your rate higher than SORA alone.
Is a 1-month or 3-month SORA loan better?
Neither is universally better. The 1-month version tracks the market faster and reprices monthly; the 3-month version is smoother and reprices quarterly. Choose based on whether you want your instalment to adjust quickly or gradually.
Does SIBOR still exist?
SIBOR has been discontinued. Singapore floating mortgages are now priced against SORA. Existing SIBOR loans were transitioned as part of the move to the SORA benchmark.
The bottom line
SORA is a transaction-based benchmark published by MAS, and it is the same for every bank. Your floating mortgage is SORA plus a margin, so compare packages on the margin and tenor, not the headline. And for the live SORA level, go to the MAS website rather than trusting a static number.
Winfred Quek is an Associate Marketing Consultant at Crestbrick Pte Ltd, advising Singapore upgraders, investors, and families. CEA R073319H. The information on this page is general and does not constitute financial, investment, or mortgage advice.