Surprising fact: the 1‑month compounded SORA slipped below the psychological 2 per cent mark this month — 1.9847 per cent on June 13 and 1.7932 per cent on June 27.
This shift matters because small moves in the benchmark quickly change what you pay on a home loan. We explain, in plain terms, how the benchmark shapes mortgage costs and why recent prints nudged mortgage rates under 2 per cent for the first time.
We connect today’s moves to practical choices you face: refinancing, choosing between fixed and floating packages, and timing that aligns with your lock-in period. You’ll see how spreads and fees can matter as much as headline numbers, and why banks price differently day to day.
To explore tailored scenarios for your mortgage, Whatsapp us for a discovery session. For a clear primer on how the benchmark works and comparisons among products, see this guide on SORA products and choices: SORA rates explained.
Key Takeaways
- Recent prints pushed mortgage pricing into the sub‑2 per cent zone for some loans.
- Small benchmark moves compound into real monthly savings on larger loans.
- Spreads, fees and bank timing affect your all‑in cost as much as headline numbers.
- Floating packages are becoming competitive again versus fixed options.
- Watch normalization and Fed moves before the end of the year for clearer direction.
What the SORA interest rate means today: definitions, methodology, and the latest prints
We explain the benchmark in plain terms so you can see how daily trading in the interbank market feeds pricing on your mortgage. This is the transaction-based yardstick that banks use to set many home loan offers.
From Singapore Overnight Rate Average to home loans: why this matters
The singapore overnight rate is an average of actual overnight trades. It smooths daily moves into tenors that lenders use for mortgage pricing. Compounded SORA tenors (1-month, 3-month) turn volatile prints into a clearer reference for monthly payments.
How the benchmark is computed and contingency rules
MAS requires minimum data: at least five reporting banks, ten trades and S$500m volume. If any threshold is missing, Contingency SORA applies: the change in the MAS Standing Facility reference between trade dates is added to the previous business day’s print, floored at zero. This keeps the index robust even when activity is thin.
Current snapshot and why floating is competitive
Daily prints hit about 2.08% on Mar 13 and briefly rose to 2.24% the next day. By late June, the 1-month compounded SORA dipped to 1.7932 per cent, allowing offers like SORA + 0.20 per cent to land near 1.99% all-in for qualifying borrowers (conditions apply).
As the rate environment normalizes, floating packages have edged below many fixed options. We can help you weigh responsiveness versus payment stability — Whatsapp us for a discovery session.
Drivers of the current interest rate environment: liquidity, MAS policy, and global rate cuts
A mix of domestic cash abundance and overseas monetary moves is steering borrowing conditions now. This blend explains why mortgage pricing can soften even after policy nudges.
MAS easing and SGD dynamics: ample liquidity, low loan-to-deposit ratios, and borrowing costs
In January, MAS eased the Singapore dollar policy for the first time since 2020. Yet the dollar stayed resilient and liquidity remained ample.
Singapore’s loan-to-deposit ratio slid to 68.2% in January. That means banks have plentiful funding, which helps push borrowing costs down for homeowners.
Fed funds trajectory, rate cuts, and the path for 3‑month SORA and compounded SORA
Global rate cuts usually flow into local benchmarks with a lag. Daily prints hit about 2.08 per cent on March 13 and 2.24 per cent on March 14, showing how volatile spikes can precede broader easing.
The 3-month sora often follows the daily trend. If global cuts gather momentum, compounded averages should drift lower over successive resets, helping home loan pricing drop too.
Policy guardrails: managing rates while cooling the property market
Authorities balance two goals: support the economy and avoid reigniting property demand. That caution can slow how quickly banks cut mortgage rates, even when lower rates are available in markets.
Practical steps: review your lock-in period, check admin fees and clawbacks, and monitor spreads across banks. Whatsapp us for a discovery session and we’ll translate these signals into a clear plan for your home loan.
SORA interest rate outlook: scenarios for sub‑2% and the probabilities of sub‑1%
We map out scenarios where home loan pricing drifts lower, stalls, or reverses, so you can act with confidence.
Base case: rangebound 1.3%–1.8%
Our base case assumes one or two fed funds cuts before year‑end and slower economic growth. Compounded benchmarks should settle in a 1.3–1.8 per cent band.
What this means: well‑priced spreads translate into lower all‑in mortgage rates for many borrowers. Floating packages are likely to remain competitive versus fixed offers.
Low‑rate scenario: sub‑1% possibility
If fed funds fall another 100 bps and bank funding eases, compounded figures could slip below 1 per cent. That would push some home loan pricing into exceptionally low territory.
Note: this path needs sustained global easing and a firm dollar to hold borrowing costs down.
High‑friction risks
Tariffs, supply bottlenecks, or a higher neutral policy path could stall cuts or lift levels into 2026. Banks may widen spreads to protect margins in that case.
| Scenario | Key drivers | Likely band (per cent) | Borrower action |
|---|---|---|---|
| Base | 1–2 fed funds cuts; slower growth | 1.3–1.8% | Compare spreads; consider 3‑month SORA for steadiness |
| Low‑rate | Additional 100 bps cuts; easing funding costs | Lock a conversion within lock‑in period if available | |
| High‑friction | Tariffs, price pressures, tighter policy | Above current prints | Prioritize shorter clawbacks and flexible terms |
Action steps and how banks price
If you’re within lock‑in period, ask about a free conversion. If you’re outside it, compare all‑in cost: spread, legal fees, and clawbacks.
Some banks move quickly with cuts; others protect margin. Look for clear repricing windows and balanced spreads.
- Stagger a partial prepayment or pick 3‑month references for smoother resets.
- Check conversion rules within lock‑in period to preserve optionality.
- Whatsapp us for a discovery session — we’ll model paths and help you decide when and how to act.
Conclusion
Today’s market shows a clear opening where well-timed moves can lower your mortgage outlay. Liquidity and a normalising curve mean some floating offers now undercut fixed options, with one‑month compounded prints below 2 per cent and select all‑in packages near 1.99 per cent for larger loans (conditions apply).
You should run a quick review of your current period to next reset, fees, and your lender’s spread. Compare at least three banks and check legal subsidies and clawbacks before changing your home loan.
Asset‑rich owners can lock in lower interest outlay while keeping flexibility if rates drift down further. When you’re ready, Whatsapp us for a discovery session — we’ll tailor options and help you act with confidence.
FAQ
What does the Singapore Overnight Rate Average mean for my home loan?
The Singapore overnight benchmark is the market’s short‑term cost of funds. Lenders often link mortgage pricing to a compounded version of this benchmark plus a spread. When the benchmark falls, borrowing costs on floating loans typically decline, giving you lower monthly payments if your contract adjusts with the compounded tenor.
How is the overnight benchmark calculated and monitored?
The benchmark is derived from actual unsecured interbank transactions over a trading day. Regulators ensure data sufficiency and publish fallback measures so the series remains reliable. There’s also a central bank facility that provides a link between policy operations and daily funding levels.
What is the current snapshot for the overnight benchmark and its compounded tenors?
The daily benchmark has been hovering near two percent, while many compounded tenors used for mortgages have moved below that level as markets price in easing. This shift reflects recent liquidity conditions and expectations for policy easing abroad.
Why are floating rates slipping below fixed mortgage offers now?
Floating pricing tracks short‑dated market funding, which can fall faster than fixed deals when global central banks signal cuts. Fixed-term loans include longer-term risk premia, so in a normalizing environment floating options may look cheaper.
What are the main drivers of the current rate environment?
Key factors include ample domestic liquidity, central bank policy settings, and the outlook for global rate cuts. Low loan‑to‑deposit ratios at banks and softer borrowing demand are keeping local funding costs down, while expectations for policy easing abroad influence the trajectory of short-term benchmarks.
How do U.S. Fed moves affect local three-month and compounded benchmarks?
The U.S. policy path influences global dollar funding and risk premia. When the Fed signals cuts, short-term yields abroad tend to fall, which feeds into local three‑month and compounded measures through market linkages and portfolio flows.
What policy guardrails should borrowers be aware of?
Authorities balance supporting growth with cooling the property market. Measures can include macroprudential limits and lending conditions that affect loan availability and pricing. Borrowers should expect policy adjustments if credit growth or prices accelerate sharply.
What are realistic outlook scenarios for the benchmark over the next year?
Forecasters usually present a base case where the benchmark ranges between about 1.3% and 1.8% if cuts proceed and growth cools. A low‑rate scenario could push levels below 1% with more aggressive global easing. Conversely, supply shocks or higher neutral policy could lift levels above the base range.
What practical steps should borrowers consider now?
Review your loan spread, lock‑in penalties, and whether your tenure uses compounded short-term averages. If you’re within a lock‑in period, check conversion costs before switching. Consider refinancing only if the net savings after fees are clear and align with your time horizon.
How do bank spreads and costs affect mortgage and refinance decisions?
Lenders price loans using the benchmark plus a spread that covers funding costs, credit risk, and profit. Even with a lower benchmark, a wider spread can offset savings. Compare full loan costs, fees, and flexibility when deciding to refinance or switch products.
