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Why property investors should take note of SIBOR and SOR rates

Dear Investors,

 As some of you may not know, some of the banks loan from other banks to finance themselves in order to loan money to property buyers. 

 In general, most mortgage loans in Singapore are priced at a “premium” to 3-Month SIBOR, though there are fixed rates available. For example, a mortgage loan can be priced at 3-Month SIBOR + 0.8%, meaning banks will make 0.8% profit margin on the loan after paying 3-Month SIBOR to a lender. If 3-Month SIBOR is 0.77%, the total interest could be 1.57%. SIBOR or SOR based home loan packages in Singapore are typically structured to allow borrowers to determine what their interest payments will be until the end of the loan tenure. Below is an example of a typical floating rate mortgage loan in Singapore.
Example Floating Rate SIBOR Package:
  • Year 1: 3 Month Sibor + 0.75%
  • Year 2: 3 Month Sibor + 0.85%
  • Year 3: 3 Month Sibor + 0.95%
  • Year 4 (onwards): 3 Month Sibor + 1.25%

A floating rate loan could be a cheaper source of funding than a fixed rate loan. However, it exposes the borrower to the risk of rising interest rates, which will inflate the debt's cost over time. A fixed rate can reduce this uncertainty, though it comes with a higher interest rate than a comparable floating rate loan in exchange.

Interested to find out more on what type of loan to opt-in now? Do a refinance later?

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Location: Singapore

Comments

  1. Chuck BushFebruary 12, 2026 at 7:20 PM

    This is a very insightful post highlighting why property investors need to stay alert to changing market trends and long-term financial planning. I especially appreciate how the article explains the importance of making informed decisions rather than rushing into investments. Real estate can offer stability and growth when approached strategically, but financing plays a huge role, too. Before committing, investors should always take time to compare home loan options to secure the best rates and repament terms.

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