SORA vs Fixed Rate Home Loans in Singapore (2026): Which Should You Choose?
SIBOR and SOR are gone. How SORA floating and fixed rate home loans work in 2026, what they cost today, and a worked example of when each one comes out ahead.
How we made this. Updated for 2026 with AI-assisted research. Figures are linked to their sources — check them before you act.
In 2011, a reader asked Mr Propwise whether to take a SIBOR or a SOR home loan. Both benchmarks have since been retired. In 2026, the real choice is a floating loan pegged to SORA or a loan with a rate fixed for two to three years. After the US Fed hike of 16 September 2026, floating packages cost about 1.5–1.8% and fixed packages about 2.0–2.2%. So fixing now costs something. Decide on how much rate risk you can carry and how much flexibility you need, not on a guess about rates.
At a glance
- SIBOR and SOR no longer exist. Floating home loans in Singapore now use SORA, which MAS publishes every business day.
- A SORA loan costs the compounded SORA rate plus a bank spread. For most loans this is the three-month rate, reset every three months. It is backward-looking, so it follows market moves with a delay.
- A fixed package locks your rate for two to three years. After that, it usually reverts to a floating rate.
- Fixed now costs a premium. Typical packages in late September 2026: about 1.5–1.8% floating and 2.0–2.2% fixed (The Business Times, 2 Oct 2026). In early September, both started at about 1.4%. 3M SORA was about 1.23% on 1 October.
- The terms still matter. Check the lock-in, the penalty and the rate after the fixed period.
What happened to SIBOR and SOR
When this column first ran, Singapore home loans were pegged to SIBOR (what banks charged one another for SGD loans) or SOR (the cost of borrowing SGD synthetically through US dollars and currency swaps). SOR depended heavily on US rates and exchange rates. It could behave strangely: in August 2011, Propwise reported that SOR had turned negative for the first time, as money poured into the Singapore dollar. Some banks then stopped using it to price loans.
When the global benchmark LIBOR was phased out, Singapore’s industry chose the Singapore Overnight Rate Average (SORA) as the replacement. SOR was discontinued after 30 June 2023 and SIBOR after 31 December 2024. The industry declared the transition complete in early 2025 (ABS). Existing SIBOR and SOR loans were converted to other rates. If an article still compares SIBOR and SOR packages, it is out of date.
How SORA works and how your loan rate is set
SORA is the volume-weighted average rate of actual overnight unsecured interbank SGD loans made between 8am and 6.15pm. Because it is based on real transactions and not on bank quotes, it is hard to manipulate. MAS publishes it by 9am the next business day.
Home loans do not use the overnight rate directly. They use a compounded SORA rate (one-month or, more commonly, three-month). This rate is calculated over the past one or three months, so it is backward-looking. A typical floating package charges:
3M compounded SORA + bank spread, reviewed every three months.
For example, with 3M SORA at about 1.23% on 1 October 2026, a spread of 0.40% gives 1.63%, in the middle of today’s floating range. HousingLoanSG tracks the daily figures.
Two practical points follow:
- SORA moves slowly into your instalment. A 3M compounded rate already averages three months, and your loan only resets once a quarter. A rate rise therefore reaches you a few months late, and so does a fall.
- Only the spread is in the bank’s control. The benchmark is public and the same for everyone. When you compare floating packages, compare the spread for every year of the loan, not only for year one.
SORA also does not follow US rates one for one. When the US Federal Reserve raised its target range to 3.75–4.00% on 16 September 2026, 3M SORA moved by only a few hundredths of a point. Our interest rate outlook explains why.
How fixed-rate packages work
A fixed package sets your rate for a period, usually two or three years. The lock-in is usually the same length. If you repay or refinance during the lock-in, you usually pay a penalty. PropertyNet’s September 2026 survey lists 1.5% as the standard penalty. When the fixed period ends, the loan usually reverts to a floating rate, often SORA plus a higher spread. At that point, you reprice or refinance.
Usually you pay a premium for a fixed rate, because the bank takes on the rate risk. In early September 2026 that premium was almost zero. After the Fed hike, banks raised fixed packages more than floating ones, and the premium is now roughly 0.3–0.7 point.
SORA vs fixed: side by side
| SORA floating | Fixed (2–3 years) | |
|---|---|---|
| Typical rate (late Sep 2026) | about 1.5–1.8% | about 2.0–2.2% |
| How the rate changes | Every 1 or 3 months, with compounded SORA | Not during the fixed period |
| Instalment certainty | Low | High for the fixed period |
| Lock-in | Varies; some packages have none | Usually matches the fixed period |
| If rates fall | You gain automatically | You only gain by repricing or refinancing after the lock-in |
| If rates rise | You pay more, a few months later | You are protected until the fixed period ends |
| Suits | Strong cash flow, a possible sale or early repayment, a large cash buffer | A tight budget, or a strong preference for predictable instalments |
Worked example: when does fixed win?
Say you borrow S$800,000 over 25 years. You compare a two-year fixed rate of 2.0% with a floating rate of 3M SORA + 0.40%, which is 1.63% at today’s SORA. Here is the total interest over two years:
| What 3M SORA does | Fixed 2.0% | Floating | Difference |
|---|---|---|---|
| Stays about 1.23% | S$31,042 | S$25,261 | Floating cheaper by about S$5,780 |
| Rises to 2.0% for year two | S$31,042 | S$31,154 | About level (fixed cheaper by about S$110) |
| Falls to 1.0% for year two | S$31,042 | S$23,504 | Floating cheaper by about S$7,540 |
Example only. Instalments are recalculated at each rate change. Your bank’s reset dates and spreads will differ.
At today’s prices, floating wins unless SORA rises a lot. In this example, 3M SORA would have to climb to about 2% for the whole of year two before the fixed package breaks even. But the risk is not only the total. At a 2.4% all-in rate in year two, the floating instalment would be about S$3,537 a month, against S$3,391 at 2.0% fixed, and it would keep rising if SORA went higher. Run your own figures in the Propwise mortgage calculator.
This does not mean floating always wins. When fixed rates carry a real premium, as they do now, floating borrowers pay less in most years. A fixed rate is insurance: worth buying if a sharp rise in your instalment would hurt you.
How to decide
- Can you pay the instalment at 4%? If that would be a strain, choose certainty. Banks already test your loan at 4%, but that test is a regulatory minimum and not a comfortable budget.
- Might you sell or repay a large amount within two to three years? Then the lock-in matters more than the rate. Look for a floating package with no lock-in, or one that waives the penalty if you sell.
- Do you hold a large cash buffer? A floating loan with an offset or linked-deposit feature can lower your effective rate. See our guide to mortgage offset accounts.
- What is the rate after year two or three? The floating rate that starts after a fixed period can cost more than the fixed rate itself.
- Put a reminder three months before the lock-in ends. Then compare repricing with refinancing. See our refinancing guide and how to choose your home loan.
Bottom line
Mr Propwise’s 2011 answer still holds: nobody can predict where benchmark rates will go, so do not pay much for a guess. What has changed is the benchmark, and the price of certainty. In late 2026, fixing costs roughly 0.3–0.7 point more than floating. That premium buys you certainty, which matters most if your budget is tight. A SORA floating loan suits you if you need flexibility or have the cash flow to absorb higher rates. Choose for your situation, then review the loan before the lock-in ends.
Sources
- Singapore Overnight Rate Average (SORA) — Monetary Authority of Singapore, updated 21 Jul 2026
- SOR and SIBOR to SORA transition — The Association of Banks in Singapore, Feb 2025
- SORA rates (MAS data) — HousingLoanSG, 1 Oct 2026
- Latest bank mortgage loan rates across Singapore — PropertyNet, 4 Sep 2026
- S’pore mortgage rates rise following Fed hike: What home owners should look out for — The Business Times, 2 Oct 2026
- FOMC statement, 16 September 2026 — Federal Reserve, 16 Sep 2026
- Calculating TDSR for property loans — Monetary Authority of Singapore, updated 29 Sep 2022
