From SOR to SORA: How your SOR-based home loan will be affected and options available

It’s best to speak to your bank soon. That’s the advice from The Association of Banks in Singapore (ABS) to homeowners who have yet to convert their loan packages pegged to the Singapore Dollar Swap Offer Rate (SOR).

SOR relies on the US Dollar London Interbank Offered Rate (USD LIBOR) in its computation, which will be discontinued after June 2023 as part of global reform efforts to improve the robustness and integrity of financial benchmarks. Accordingly, SOR will also be discontinued after June 30, 2023. Replacing it is the Singapore Overnight Rate Average (SORA), an interest rate benchmark administered and published by the Monetary Authority of Singapore (MAS) since 2005.

“SORA is a reliable, robust and transparent rate that is based on actual borrowing transactions in the unsecured overnight interbank cash market. SORA is used as a reference rate in a variety of financial products such as loans, bonds and derivatives. Banks in Singapore have been offering housing loans that reference SORA since 2020,” says Mrs Ong-Ang Ai Boon, director of ABS.

As at end-March 2022, there remained about 5,000 borrowers with SOR-based retail loans. Many customers have already taken the opportunity over the past few years to transition their loans to SORA or other prevailing loan packages offered by banks, taking advantage of the alternative options made available to them.