Singapore Interbank Offered Rate (SIBOR)

  SIBOR is the median rate at which Singapore banks are lending to one another. It’s regulated and monitored by the Monetary Authority of Singapore (MAS). Singapore mortgage loans normally use the 3-month or 1-month SIBOR rate. With a 1-month SIBOR rate, your home loan will be revised to match SIBOR each month. Regarding a 3-month SIBOR loan, your home loan will be adjusted to match SIBOR every 3 months.  One of the main advantages of the SIBOR rate is it’s transparent and not monitored by any single bank. What’s more, choosing this option could save you money. This is because they tend to go down more quickly when compared to other home loan interest rates.  The flip side to this is when interest rates increase, SIBOR rates follow the same trajectory and at a faster rate than other home loan types. As the SIBOR fluctuates, it can be difficult keeping track of how much you are actually paying. It’s also important to note that SIBOR is expected to be discontinued completely by 2024, with the SORA interest rate set to take its place. As each bank has the same SIBOR, the only part of the interest rate they’re in charge of is the bank’s spread. This means it’s more important than ever to pick a bank that has the lowest spread.  As we have already mentioned, there are pros and cons to each of the home loan options above. It’s your responsibility to weigh up the advantages and disadvantages, so that the one you pick aligns with your finances.