SIBOR stands for Singapore Interbank Offered Rate and is a daily

reference rate A reference rate is a rate that determines pay-offs in a financial contract and that is outside the control of the parties to the contract. It is often some form of LIBOR rate, but it can take many forms, such as a consumer price index, a house pric ...

based on the

interest rates An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, ...

at which

bank A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...

s offer to lend ''unsecured'' funds to other banks in the

Singapore Singapore, officially the Republic of Singapore, is an island country and city-state in Southeast Asia. The country's territory comprises one main island, 63 satellite islands and islets, and one outlying islet. It is about one degree ...

wholesale

money market The money market is a component of the economy that provides short-term funds. The money market deals in short-term loans, generally for a period of a year or less. As short-term securities became a commodity, the money market became a compo ...

(or

interbank market The interbank market is the top-level foreign exchange market where banks exchange different currencies. The banks can either deal with one another directly, or through electronic brokering platforms. The Electronic Broking Services (EBS) and Reut ...

). It is similar to the widely used LIBOR (

London Interbank Offered Rate The London Inter-Bank Offered Rate (Libor ) was an interest rate average calculated from estimates submitted by the leading banks in London. Each bank estimated what it would be charged were it to borrow from other banks. It was the primary b ...

), and

Euribor The Euro Interbank Offered Rate (Euribor) is a daily reference rate, published by the European Money Markets Institute, based on the averaged interest rates at which Eurozone banks borrow unsecured funds from counterparties in the euro wholes ...

(Euro Interbank Offered Rate). Using SIBOR is more common in the Asian region and set by the Association of Banks in Singapore (ABS). SIBOR comes in 1-, 3-, 6-, or 12-month tenure. At the end of the tenure, the borrowing bank returns the borrowed fund to the lending bank. The 3-month SIBOR is the most popular rate that loans are pegged to and has been hovering below around 1% in the past few years. Many floating rate mortgages in the country are pegged to SIBOR due to its transparency. Alternatives to SIBOR include SOR, Fixed-rate mortgages, Combos (Combination of SIBOR and SOR). Although they may be higher or lower than SIBOR at any point of time, they usually move in tandem with the direction of SIBOR and are used by banks to help price loans. SIBOR is being discontinued, with the 6-month SIBOR rate being discontinued with effect from 31 March 2022, and the rest of SIBOR to be discontinued with effect from 31 December 2024.
'' Association of Banks in Singapore, ABS'' 27 January 2023 SIBOR will be functionally replaced by SORA ( Singapore Overnight Rate Average).

References

External links

Association of Banks in Singapore (ABS)
Mortgage Mortgage industry of Singapore Reference rates {{Singapore-stub

See also

References

External links