If you have a property loan that references the Singapore Swap Offer Rate (SOR), you need to switch to an alternative loan package by 31 August 2022. This is to prevent any inconvenience due to possible disruption to your loan when SOR ceases after 30 June 2023 (for example, if the interest on the loan cannot be computed).

You are strongly encouraged to contact your bank by end July 2022 to discuss your options, including the impact of the recent rise in interest rates.

Your SOR property loan will be automatically switched to a SORA Conversion Package if you do not switch out by 31 August 2022. 

The SORA Conversion Package switches your existing SOR loan to a comparable SORA loan and comprises three components – 3-month Compounded SORA published by MAS; your existing SOR margin; and an Adjustment Spread (Retail) published by ABS Benchmarks Administration Co.

SOR relies on US Dollar London Interbank Offered Rate (USD LIBOR) in its computation. USD LIBOR will no longer be available as international regulators have announced that it would be discontinued, or cease to be representative immediately after 30 June 2023. As such, SOR will also be discontinued immediately after 30 June 2023.

In line with global interest rate benchmark reforms, Singapore Interbank Offered Rate (SIBOR) will similarly be discontinued soon. The 6-month SIBOR was discontinued on 31 March 2022, while the more widely used 1-month and 3-month SIBOR will be discontinued immediately after 31 December 2024. To prepare for the discontinuation of SIBOR, all financial institutions have ceased usage of SIBOR in new loans.

To support a smooth transition away from SOR and SIBOR, the Association of Banks in Singapore and the Singapore Foreign Exchange Market Committee (ABS-SFEMC) had earlier identified the Singapore Overnight Rate Average (SORA) to replace SOR and SIBOR as the key interest rate benchmark for use in Singapore Dollar financial instruments such as loans, bonds and derivatives. SORA is an interest rate benchmark published daily by the Monetary Authority of Singapore (MAS). It is a transparent, robust and reliable interest rate benchmark that is underpinned by a deep and liquid overnight funding market.

SORA, SOR and SIBOR AT A GLANCE