The Singapore Overnight Rate Average (SORA) has become the benchmark for several types of loans in Singapore. Its movement affects not just banks and institutional investors, but also households, since many floating home loans are now pegged to SORA. At a Maybank Securities Singapore session with Wedbush Securities earlier in April 2026, the panel forecast that three‑month compounded SORA (3M SORA) could fall to 0.7% by the end of the year. 3M SORA is one of two financial benchmarks for home loans in Singapore.
Source: Maybank Securities Singapore
Since peaking in 2023, 3M SORA has been dropping steadily for over a year, falling below 3.0% in January 2025 and reaching 1.07% on April 1st. It is expected to fall further, driven by anticipated U.S. Federal Reserve rate cuts at the end of the year, along with safe‑haven inflows into Singapore’s AAA‑rated economy. A modest S$NEER appreciation, which the panel predicted ahead of the Monetary Authority of Singapore (MAS) decision on 14th April, and robust GDP growth further underpin this outlook, highlighting Singapore’s resilience.
Cheaper Home Loans Means More Breathing Room For Borrowers
For households, a falling SORA spells relief. With most floating mortgage packages now pegged to the aforementioned 3M SORA, or one-month compounded SORA (1M SORA), a decline towards 0.7% would directly lower monthly instalments. For example, a $500,000 loan over 25 years, pegged to 3M SORA, could see monthly payments fall by more than $200 compared to 2024.
Refinancing activity is also likely to pick up. Borrowers who locked into higher‑rate packages during the tightening cycle may now find it attractive to refinance into cheaper loans pegged to SORA, especially now that their one- or two-year lock-in period is over.
Banks have yet to adjust their spreads to protect margins, so the full benefit of lower SORA is still passed on to homeowners. The property market could see renewed confidence as financing costs ease, supporting demand for private housing.
T-Bills See Lower Yields Amidst Elevated Demand
The impact on treasury bills (T-Bills) is more complex. Lower SORA levels will compress yields on short‑term government securities, reducing returns compared to the elevated 3–4% levels seen in 2023 and 2024. For retail investors who flocked to T-bills during the high-rate environment, this means recalibrating expectations. As the Maybank Securities panel pointed out, 6-month T-bill cut-off yields have remained low at 1.6% or below for the past several months.
Yet, despite diminished yields, they are still expected to retain their appeal among risk‑averse investors as a popular safe‑haven asset, particularly in times of global uncertainty.
SORA Could Be A Tailwind For S-REIT Valuations
For Singapore REITs, the outlook is considerably brighter. Lower borrowing costs will ease the debt burden of REITs, many of which rely heavily on leverage to finance acquisitions and operations. This could improve distributable income and support valuations. As yields on risk‑free assets fall, the relative attractiveness of REIT distributions rises, potentially drawing more investor interest.
Sectoral performance will diverge. Industrial and logistics REITs may benefit from Singapore’s resilient GDP growth and trade flows, riding on demand for warehousing and e‑commerce infrastructure. Commercial and healthcare sectors are likely to experience growth. Hospitality REITs, meanwhile, will depend more on consumption trends and the pace of tourism recovery, which has been uneven across segments.
Overall, falling SORA could act as a tailwind for REIT valuations, especially as institutional investors return to REITs and banks in 2026, as the Maybank Securities panel pointed out. The combination of cheaper debt and relatively attractive distributions positions S‑REITs as a compelling play in a lower‑rate environment.
Why SORA Is Sliding
The anticipated pivot by the U.S. Federal Reserve towards rate cuts in 2025 and 2026 is the primary driver of falling SORA, easing global liquidity conditions. As the Fed unwinds its tightening cycle, global interest rates are expected to trend lower, and Singapore, being a small and open economy, will inevitably reflect these shifts.
At the same time, Singapore’s reputation as a safe haven continues to attract capital inflows. Investors seeking stability amid geopolitical tensions or volatile emerging markets often channel funds into Singapore, reinforcing downward pressure on domestic rates.
What This Means For Homeowners
Households should consider refinancing or repricing your home loan, taking advantage of the lower rates. Ultimately, the decision to adjust your home loan is highly personal, but you don’t have to make it alone.
Mortgage brokers in Singapore offer their time and advice to help you make the decision that is right for your individual needs. Since they are often paid the same commission rates by the banks they refer you to, they offer their services to you for free. Consider our friends over at RedBrick and Cashew.
If you prefer a DIY approach, Cashew offers a user-friendly platform to compare packages across banks based on your loan inputs. Additionally, Cashew’s advisors also assist you in applying for the preferred loan package, all from the comfort of your home.
Alternatively, RedBrick offers a more personalised experience, with its professional mortgage brokers sharing insights into the nuances of each loan package during a free, non-obligatory consultation. Check out our home loan guide for more information.
