FIRST: Know the Terms

Differentiate between the different interest rates.


Based on the bank’s rates at the time of application. During the first few years of the mortgage loan, the interest rate is fixed.

Example: Fanny applied for a mortgage loan with a Bank at a fixed rate of 1.48% for the first 3 years.  This means that she will be paying an interest rate of 1.48% per annum for 3 years.

Floating rates (SIBOR or  SOR):

Normally banks will charge a spread in addition to the SIBOR or SOR rate.


The Association of Banks in Singapore sets the Singapore Interbank Offered Rate daily. Based on the unsecured funds/rates that banks and financial institutions in Singapore borrow from each other.

Example: SIBOR Rates: 1M SIBOR – 0.35%, 3M SIBOR – 0.4%


The Association of Banks in Singapore also sets Swap Offer Rate. Based on the expected forward exchange rate between the US dollar and Singapore dollar.


How both SIBOR & SOR work?

Most Singapore’s banks provide either SIBOR or SOR rates for their mortgage loan packages.

In Singapore, most banks offer housing loan packages pegged to either SIBOR or SOR rate. You can think of it as the “cost price” for the bank. They will then add a margin on top of their cost price. This is called a spread. (eg. 3 month Sibor + 0.8%)

SIBOR and SOR allow you to choose to lock-in the rates for 1 month, 3 month, 6 month, 9 month or 12 months. If you choose a 1 month SIBOR, it simply means, this current month’s 1M SIBOR rate might be 0.35%, but next month’s 1M SIBOR rate might be 0.32% or 0.37%. So you will expect the monthly instalment to be higher or lower. 

Example: Jan = SIBOR 0.35% + 1% , Feb = SIBOR 0.32% + 1%

Alternatively, if a 12 month SIBOR is chosen, which usually has higher rates, the rates if at time of application for SIBOR is 0.59%, this rate of 0.59% will remain for the whole 12 months regardless of the fluctuations in the market.  A longer lock-in of SIBOR rates provides more stability but might be paying higher rates comparing to a 1/3/6/9 month SIBOR.

Example: Jan= SIBOR 0.59% + 1%, Feb = SIBOR 0.59% + 1% …. Dec = SIBOR 0.59% + 1%

A 3 month SIBOR will be a good choice to have best of both worlds of enjoying the low rates and also at the same time being less affected by the fluctuations.