Consumers and corporates in Singapore prefer the stability of Singapore Overnight Rate Average (SORA)-based interest rates, with over six in 10 respondents indicating that they are open to SORA-pegged products, according to a recent UOB survey.

That said, as the same respondents are not as familiar with SORA-pegged products, seven in 10 of them stated that they would only apply for one within six to 12 months of the product becoming available.

The online survey conducted by UOB, polled over 300 individuals in January, including business owners, to understand public awareness and acceptance levels of SORA.

Respondents said that the certainty, transparency and stability of the reference rate of their loan were the key considerations when choosing a loan package.

The increasing awareness and acceptance of SORA-pegged products is a positive indicator for the financial industry, which will be fully shifting to SORA-based products this year.

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Financial institutions, including banks, will cease to reference the Swap Offer Rate (SOR) in products by the end of April. They will then help customers with legacy SOR contracts transit to SORA.

The use of SIBOR in new loan products will also cease by end September.

“UOB has been working closely with the industry on Singapore’s transition to the new reference rate SORA. We understand consumers and small- and medium-sized enterprises want transparency and stability in the reference rate of their loan packages, as this helps them plan their finances better,” says Eddie Khoo, head of group retail at UOB.

“As a leading provider of property loans in Singapore, our SORA-pegged property loans offer customers greater certainty and clarity, which will help to increase their confidence in and adoption of more SORA-based financial products,” Khoo adds.

UOB, which launched its first SORA-based residential and commercial property loan solutions in December 2020, says the interest rates of its SORA-pegged loans will be reviewed and set once every three months.

The home loan by UOB is applicable for completed private properties or HDB flats. The SORA-pegged loan by UOB offers more flexibility by enabling customers to reprice their home loan or sell their property without any penalties.