Switch from SIBOR to SORA prior to April 30th Take action now to allow yourself more time to choose new home loan

Speak to your bank as soon as you can to identify an option that meets your needs, whether it is a fixed rate loan, floater loan or SORA Conversion Package.

Sophia Tan, a finance professional (not her real name) and her sister got a new mortgage for their three-bedroom home at the end of last year.

The prior home loan was built on the Singapore Interbank Offer Rate (SIBOR) however, the bank advised them that SIBOR was to be eliminated at the end of December, 2024.

The sisters spoke with the expert in repricing home loans at their bank regarding their options and ultimately decided to take out a fixed-rate, two-year home loan that was 3 percent annually. The sisters didn’t have to pay a repricing cost or recalculate their total loan servicing ratio (TDSR), loan-to-value (LTV) and mortgage servicing ratio (MSR).

Shares Ms Tan: “The process was quite smooth and fuss-free. The entire process, starting from the first discussion with the bank’s repricing home loan specialist to the time taken to evaluate our options and finally repricing, was about two weeks total.

“And as our relevant information was already in the bank, the consultant was able to do the calculations and simulate monthly repayments for the various mortgage packages we had for our home.”

Ms Tan is one of over 70k homeowners who took active steps to switch out of their SIBOR-based loans, ahead of the discontinuation of SIBOR at the end of the year. Currently, almost 50,000 homeowners have yet to change. It is highly recommended they contact their bank before the end of April in this year in order to understand all options and ensure smooth transfers.

Transition from SIBOR and SORA

  • The gradual elimination of SIBOR which is an interest rate derived from estimates provided by banks, began in 2020. This is in line with the global trend towards benchmarks which use actual transactions to calculate their rates.
  • SORA (Singapore Overnight Rate Average) is the benchmark rate of interest that Singapore banks are using today to determine the cost of floating-rate loans. It is calculated based on the rates banks are willing to pay each other for borrowing money that will be paid back the following day.
  • Singapore banks stopped offering new SIBOR-based housing loans in October 2021, and they are currently helping homeowners with existing SIBOR-based loans to transition to a different loan of their choice. The choices available to clients include the SORA Conversion Package and other floating rate options, fixed rate packages and hybrid loan options.
  • Banks wrote letters to homeowners in the affected areas from the month of August 2023 until late January 2024.


Find out more about: Terra Hill Pricing


More choices until April 30

Homeowners affected by the change who contact their banks prior to the close of April will be permitted to select from a variety of different loan packages, which includes the SORA Conversion Package, which is designed to limit the impact of the home loan borrowers’ total loan payment at the point at which the loan is converted.

The Singapore Overnight Rate average (SORA) is the standard interest rate Singapore banks are using for pricing floating rate loans. The Monetary Authority of Singapore (MAS) publishes SORA daily on its website, along with the compounded average SORA for the past three, one, and six-months. These is more stable than the daily figures. The three-month Compounded SORA is the most widely used reference rate for floating-rate home loan packages offered by banks in Singapore.

Customers are not charged any charges for switching as long as they are with the same bank.

We wouldn’t have realized that if we hadn’t taken action last year that refinancing to a different loan might result in lower monthly payments. “A little goes a very long way. I’m glad we began early,” says Ms Tan noting that she’s paying 3% in interest that is less than the Compounded SORA rate for the three-month period at the time.

“The certainty of fixed monthly home loan payment gives us peace of mind, while the shorter lock-in period gives us some flexibility as we can think about repricing the loan again within two years,” she adds.

What is the consequence if I don’t get out of my home loan by the end of April 2024?

  • Homeowners who don’t approach their banks prior to April 30 will have their loans converted automatically into the SORA Conversion Package beginning June 1.
  • The homeowners whose loan package is automatically changed to the SORA Conversion Package will still have the right to a no-cost switch to any of their banks’ current packages prior to the 31st of December 2024.

Better to act quickly

Mrs Ong-Ang Ai Boon, director of The Association of Banks in Singapore (ABS) she advises home owners with SIBOR-based loans should talk to their banks and consider their various options as soon as possible, just as Ms Tan and her sister had done.

“Borrowers are advised to actively get in touch with their banks, especially when mortgage payments make up a big part of their monthly expenses.

The end of SIBOR gives home loans that are based on SIBOR the chance to look at an alternative package of home loans, without having to pay any charges,” says Ms. Addison.

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