By MoneyBees
Legacy benchmark interest rate at which banks lent each other in SGD. Discontinued at end-2024. All SIBOR loans converted to SORA.
SIBOR (the Singapore Interbank Offered Rate) was a quoted benchmark interest rate at which banks in Singapore lent each other SGD on an unsecured basis.
From the 1980s through 2024, SIBOR was the dominant reference rate for floating-rate home loans in Singapore. Borrowers paid 'SIBOR + spread' rates that reset monthly or quarterly.
SIBOR was officially discontinued at the end of 2024. All SIBOR-based mortgages converted to SORA-based equivalents.
Quoted nature: banks submitted estimates of what they could borrow at, not actual transaction rates. After the LIBOR scandal in 2012 revealed widespread manipulation of quoted benchmarks globally, regulators pushed for transaction-based alternatives.
Declining underlying liquidity: the unsecured interbank SGD market shrank over the 2010s, leaving SIBOR rates determined by fewer and fewer real trades.
Global alignment: LIBOR's phase-out from 2021 prompted Singapore to follow with SIBOR's phase-out, replacing it with the transaction-based SORA.
From 2021: new SIBOR mortgages stopped being offered to new borrowers.
By Jan 2022: 6-month SIBOR discontinued.
By end 2024: 1-month and 3-month SIBOR fully discontinued.
Existing SIBOR-based loans were converted to SORA-based equivalents using formulas published by the SC-STS (Steering Committee for SOR & SIBOR Transition to SORA).
Spread adjustments were applied so that borrowers weren't worse off on day 1 of the transition, though their loan now resets against SORA rather than SIBOR.
If your loan documents still reference SIBOR, your bank should have communicated the conversion. Verify the new SORA-based reference and spread.
Compare your converted rate to what new SORA-based loans are offering. If a refinance saves materially, the lock-in penalty may be worth absorbing.
SIBOR is now a historical curiosity. SORA is the only relevant floating-rate benchmark in Singapore going forward.
Singapore Interbank Offered Rate: a quoted benchmark interest rate that banks in Singapore submitted as the rate they could borrow each other's SGD on an unsecured basis. Used as the floating-rate benchmark for home loans from the 1980s until end-2024.
SIBOR was a quoted rate based on bank submissions, which proved susceptible to manipulation (the LIBOR scandal). Regulators globally pushed for transaction-based alternatives. SIBOR has been replaced by SORA (Singapore Overnight Rate Average), computed from actual interbank trades.
All SIBOR-based loans were converted to SORA-based equivalents by end-2024. Banks applied spread adjustments so borrowers weren't worse off on day 1 of conversion. Your loan now resets against Compounded SORA + a fixed spread.
Not exactly. SORA tends to move more smoothly (it's an overnight rate compounded over 1 or 3 months, vs SIBOR's discrete quoted points). Over time, the difference is small; in volatile periods, SORA mortgages have shown less sudden volatility than legacy SIBOR mortgages.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).