SIBOR Explained: A Guide to Singapore's Benchmark Rate

SIBOR is a benchmark rate that affects many aspects of Singapore's financial landscape. It's a crucial rate for anyone looking to take out a mortgage or personal loan in Singapore.

SIBOR stands for Singapore Interbank Offered Rate, which is the interest rate at which banks lend to each other in Singapore. This rate is determined daily by the Association of Banks in Singapore, based on the rates submitted by participating banks.

The SIBOR rate is used as a reference rate for many types of loans in Singapore, including mortgages and personal loans. It's a key factor in determining the interest rate that borrowers pay.

Here's an interesting read: Singapore Swap Offer Rate

SIBOR is a crucial concept in the world of finance, but what exactly is it? In simple terms, SIBOR stands for Singapore Interbank Offered Rate, which is the rate at which banks lend and borrow money from each other.

SIBOR is a benchmark rate that reflects the average interest rate at which banks in Singapore lend and borrow money from each other for short-term periods, typically overnight or up to three months. It's calculated by the Association of Banks in Singapore, or ABS.

SIBOR is widely used as a reference rate for various financial products in Singapore, including mortgages, loans, and fixed deposits.

Explore further: Mortgage Notes for Sale from Banks

SIBOR stands for Singapore Interbank Offered Rate, which is a benchmark interest rate that reflects the average interest rate at which banks in Singapore lend money to each other for short-term periods, typically overnight.

It's used as a reference rate for various financial products, including mortgages, loans, and credit cards.

SIBOR is calculated daily by the Association of Banks in Singapore, using data from a panel of participating banks.

The rate is typically expressed as a percentage per annum, and it can fluctuate over time based on market conditions.

Borrowers can benefit from SIBOR as it can provide a lower interest rate compared to fixed rates, but they also take on the risk of potential interest rate increases.

SIBOR is often used as a floating interest rate, meaning it can change over time based on market conditions, which can be beneficial for borrowers who want to take advantage of lower interest rates but also want the flexibility to adjust their repayments if interest rates rise.

SIBOR is usually fixed for a specific period, such as 3 or 6 months, and can be used as a reference rate for various financial products.

For another approach, see: Current Mortgage Rates for 800 Credit Score

Singapore has its own interbank lending rate called SOR, which is calculated from USD Libor and reflects the interest rate in USD. SOR is administered by ABS and is used for commercial and wholesale loans.

SOR is an interbank lending rate that's calculated using USD Libor, another interest rate benchmark. It's used to price derivatives and business loans.

SOR is based on the exchange rate between the USD and SGD, making it a key rate for businesses that borrow in SGD. This rate is used for overnight borrowing transactions between banks.

SOR is not calculated if a minimum of 12 banks fail to report for that day, and the top and bottom quartiles are discarded to calculate an average benchmark. This is one of the issues with SOR.

SOR will cease to be used for new transactions by June 30, 2023, following the discontinuation of USD Libor.

Check this out: What Banks Offer Home Equity Loans

SIBOR is calculated daily based on submissions from a panel of contributing banks.

These banks submit the interest rates they would charge for interbank lending at various maturities.

The calculated rate is the average of these submissions, excluding the highest and lowest rates.

In other words, the SIBOR rate is a reflection of what banks are willing to lend to each other in the Singapore wholesale money market.

The calculation process helps ensure that the SIBOR rate is a fair and accurate representation of market conditions.

A total of four tenures are used in the SIBOR calculation: 1-, 3-, 6-, or 12-month.

Here's a brief overview of the calculation process:

This process helps maintain the integrity and transparency of the SIBOR rate.

SIBOR differed from other benchmarks like LIBOR because it's based on Singaporean banks' interbank lending rates, reflecting local borrowing conditions.

In contrast to LIBOR, SIBOR was specific to the Singaporean interbank market.

SIBOR's calculation process, which involves gathering rates from 20 member banks, makes it distinct from other benchmarks.

The Association of Banks in Singapore (ABS) sets SIBOR daily, with Thomson Reuters acting as the calculation agent.

SIBOR's daily calculation ensures that it remains a relevant and up-to-date benchmark for the Asian markets.

Worth a look: Does Mortgage Interest Accrue Daily

SIBOR and SORA are two different rates, with SIBOR being derived from forward-looking rates quoted by banks and SORA being the volume-weighted average rate based on actual transactions done.

SORA is actually a more reliable and transparent benchmark rate than SIBOR.

1MSORA and 3MSORA are two variants of SORA, with 3MSORA being less volatile than 1MSORA due to the smoothening effect over a longer interval.

This volatility difference is mainly due to the tracking period, with 1MSORA tracking the daily SORA for only the past 30 days and 3MSORA tracking the daily SORA for the past 90 days.

In trending up markets, 1MSORA tends to be higher than 3MSORA, and in trending down markets, 1MSORA tends to be lower than 3MSORA.

Take a look at this: Mortgage Denied Due to Student Loans

SIBOR was specific to the Singaporean interbank market and reflects local borrowing conditions. It differed from other benchmarks because it is based on Singaporean banks' interbank lending rates.

LIBOR, on the other hand, is based on London banks' interbank lending rates. This difference in location and focus makes LIBOR distinct from SIBOR.

The unique characteristics of SIBOR set it apart from other benchmark rates, making it a valuable tool for understanding Singapore's financial landscape.

Explore further: How Do I Know If I Have a Heloc Loan

SOR and SORA rates were updated as of 8th April 2021.

The 1-month compounded SORA rate was 0.2245.

3-month compounded SORA rate was 0.1918.

6-month compounded SORA rate was 0.1785.

Financial institutions will have to stop issuing SIBOR-linked financial products and SOR derivatives by the end of September this year.

SORA is being pushed as the main interest rate benchmark in the industry.

SOR and SORA rates are relevant to the comparison with other rates, particularly SIBOR.

Here's an interesting read: Financial Freedom Reverse Mortgage

SIBOR was set daily by the Association of Banks in Singapore (ABS).

The ABS managed the rate-setting process, ensuring that it was transparent and based on actual market transactions. The ABS worked with Thomson Reuters, which acted as the calculation agent to collate the SIBOR rate from 20 member banks every day before 11 a.m. Singapore time.

If a minimum of 12 banks failed to report the rates in a given day, there was no SIBOR for that day. This was to ensure that the rate was based on a sufficient number of market transactions.

The Monetary Authority of Singapore (MAS) regulated SIBOR, adding an extra layer of oversight to the rate-setting process. The MAS worked closely with the ABS to ensure that SIBOR remained a reliable and trustworthy benchmark for the Asian markets.

See what others are reading: Are Mortgage Rates Based on the 10 Year Treasury

SIBOR is a benchmark interest rate that influences the cost of borrowing for many Canadians. It's set by the Canadian banks.

To understand SIBOR, you need to know that it's based on the average interest rate at which Canadian banks lend to each other. This rate can fluctuate daily.

SIBOR is used as a reference rate for many financial products, such as mortgages and lines of credit. It's a key factor in determining the interest rate you'll pay.

SORA is a decentralized, open-source protocol that enables interoperability between different blockchain networks.

It was developed by the Cosmos Network to address the issue of siloed blockchains, where data and assets are locked in their respective ecosystems.

SORA allows for the seamless transfer of assets and data between blockchains, creating a more connected and decentralized internet of blockchains.

The Cosmos Network, which developed SORA, is a blockchain network that enables interoperability between different blockchain networks.

A different take: Mortgage Broker Mortgage Rates

SORA's architecture is based on the Cosmos SDK, a modular framework for building blockchain applications.

The Cosmos SDK allows developers to build custom blockchain applications with ease, which has contributed to the growth of the Cosmos Network.

SORA's interoperability capabilities are made possible by the use of Inter-Blockchain Communication (IBC) protocols, which enable secure and reliable communication between blockchains.

IBC protocols ensure that data is transmitted accurately and securely, allowing for the seamless transfer of assets and data between blockchains.

Additional reading: Mortgage Refinance Applications Drop

The Singapore Interbank Offered Rate (SIBOR) was the benchmark interest rate for lending between banks within the Asian market, stated in Singapore dollars.

SIBOR was used in the banking industry for transferring funds and managing liquidity in an interbank market.

SIBOR was replaced by SORA in the middle of 2023.

Singapore is a major hub of Asian finance due to its location, political stability, strict legal and regulatory environment, and high volume of business.

Here's a quick rundown of the key changes:

As of the latest update on 8th April 2021, the 1-month compounded SORA rate is 0.2245. This rate is a significant benchmark for financial institutions.

SORA rates have been updated, with the 3-month compounded SORA rate standing at 0.1918 as of 8th April 2021. This rate is crucial for financial planning and decision-making.

Financial institutions have been directed to cease issuing SIBOR-linked financial products and SOR derivatives by the end of September this year. This move aims to push the industry towards SORA as the main interest rate benchmark.

The 6-month compounded SORA rate is 0.1785 as of 8th April 2021. This rate is an essential consideration for investors and financial planners.

Broaden your view: Consumer Financial Protection Bureau Mortgage Servicing Rules

HDB loans are pegged to 0.10% above the existing CPF Ordinary Account (OA) interest rate, which is adjusted quarterly.

The interest rate for HDB loans is 2.6%, which results in a monthly interest payable of $1701 based on a $375,000 loan over 25 years.

HDB loans have a lower interest rate compared to bank loans, but also come with a 1.5% penalty for early repayment and a higher down payment.

Monthly repayment for a bank loan can be as low as $1,516, but this may not always be the case due to fluctuating interest rates.

HDB loans have lesser volatility compared to bank loans, which can be beneficial for homeowners who prefer a more stable environment.

Taking a SORA loan or replacing your HDB loan with a bank loan can potentially shave off a few valuable percentages from your initial HDB loan interest, making it a viable option for some homeowners.

The LTV ratio for HDB is capped at 90%, allowing you to take a $450,000 loan over 25 years, but for comparison purposes, we'll consider a $375,000 loan.

SIBOR is a complex financial concept, but let's summarize the key points. SIBOR is the average interest rate at which prime banks borrow money from other banks in the interbank market. It's a benchmark for lending rates in Singapore.

The Singapore Interbank Offered Rate (SIBOR) is influenced by the country's economic conditions. SIBOR is typically higher when the economy is growing and lower when it's slowing down. This is because banks borrow more money when the economy is growing, which drives up the interest rate.

In Singapore, SIBOR is used as a benchmark for many types of loans, including mortgages and personal loans. The interest rate on these loans is often tied to the SIBOR rate. This means that if the SIBOR rate goes up, the interest rate on the loan will also increase.

SIBOR is calculated daily by the Association of Banks in Singapore (ABS). The calculation is based on the interest rates offered by a panel of banks. The ABS uses a complex formula to calculate the average interest rate.

The SIBOR rate can have a significant impact on the cost of borrowing in Singapore. For example, if the SIBOR rate goes up, it can make borrowing more expensive for consumers and businesses.

Explore further: Do Medical Bills Affect Your Credit When Buying a House