askST: What should I do about my existing SOR-based retail property loans?

If you have an existing retail property loan that references the Singapore Dollar Swap Offer Rate (SOR), you would have heard about the impending discontinuation of SOR by now.

Banks in Singapore are in the process of converting all existing SOR-based property loans, as SOR will be discontinued after 30 June 2023.

This is because SOR relies on the US Dollar London Interbank Offered Rate (USD LIBOR) in its computation, and USD LIBOR will cease after the same date as part of global reform efforts. The Singapore Interbank Offered Rate (SIBOR), another legacy interest rate benchmark, will be discontinued after 31 December 2024.

Both SOR and SIBOR will be replaced by the Singapore Overnight Rate Average (SORA) – Singapore’s key interest rate benchmark.

Meanwhile, global interest rates are rising. This has led to higher interest rates for all loans in Singapore, including property loans.

What should you do about your existing SOR-based retail property loans now? How will rising interest rates affect your loan conversion from SOR to SORA?

Here’s what you should know.