In Singapore, most banks use Sibor to determine the interest rate of their home loan packages.
Sibor stands for “Singapore Interbank Offered Rate”. It is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the Singapore wholesale money market (or interbank market).
In Singapore, the Monetary Authority of Singapore’s (MAS) mandates that home loan interest rates should be transparent. Therefore, many Singapore banks started rolling out home loan packages that are pegged directly to the Sibor rate or Sor rate (Singapore Swap Offer Rate) since early 2007.
A typical home loan offer will be like 1-month Sibor + 0.65% or 3-month Sibor + 0.7%.
What Does “X Month Sibor” Mean?
The number of months listed in front of the Sibor rate determines how often the rate is renewed.
A “1-month Sibor” means that every month, your home loan rate will be adjusted to match the prevailing Sibor rate. A “3-month Sibor” means the rate is adjusted every three months.
For home loans, the most common rates are 1-month Sibor or 3-month Sibor. But it is possible for a home loan to have Sibor rates of 1, 3, 6, 9, and 12 months.
Below is the historical chart of various Sibor rates.