SOFR — the Secured Overnight Financing Rate — is the benchmark interest rate used to price more than $200 trillion of U.S. financial contracts, from adjustable-rate mortgages to private student loans to corporate credit facilities. It measures the cost of borrowing cash overnight against U.S. Treasury collateral in the repo market. The New York Federal Reserve publishes SOFR every business day at approximately 8:00 AM Eastern Time, based on roughly $1 trillion in actual transactions. As of April 15, 2026, overnight SOFR stands at 3.72%. SOFR replaced LIBOR (the London Interbank Offered Rate) after the final USD LIBOR panels ceased on June 30, 2023 — the culmination of a six-year transition led by the Federal Reserve’s Alternative Reference Rates Committee (ARRC) after LIBOR manipulation scandals exposed the fragility of the old benchmark. For borrowers, SOFR matters because when you see a loan quote that says “SOFR + 2.75%,” that first number moves daily with short-term money market conditions, and your effective rate moves with it.
- Current overnight SOFR is 3.72% (April 15, 2026). The 30-day average SOFR is also tracked as a smoother alternative used on most ARMs and consumer products.
- More than $1 trillion in actual daily transactions sits underneath SOFR — it is derived from real Treasury repo trades, unlike LIBOR which was bank-estimated.
- LIBOR ceased on June 30, 2023 when the final five USD LIBOR panels ended. A synthetic USD LIBOR continued for “tough legacy” contracts through September 30, 2024 — that bridge is now closed too.
- Three flavors exist: overnight SOFR (published daily by the NY Fed), SOFR averages (30, 90, 180-day rolling averages), and Term SOFR (forward-looking 1, 3, 6, and 12-month rates published by CME Group since July 2021).
- The 2022 LIBOR Act legally converted “tough legacy” contracts lacking clear fallback language to SOFR-based rates, removing the last major transition risk for legacy loan documents governed by U.S. law.
- What SOFR Actually Is
- How SOFR Is Calculated (the Repo Market Mechanism)
- The Three Flavors: Overnight, Averages, and Term SOFR
- Why LIBOR Had to Go — and Why SOFR Won
- How SOFR Shows Up in Your Loans
- SOFR vs the Federal Funds Rate vs the Prime Rate
- How to Track SOFR Yourself (Free .gov Tools)
- Frequently Asked Questions
What SOFR Actually Is
SOFR is a measure of what it costs, on average, to borrow U.S. dollars overnight secured by U.S. Treasury securities. Imagine a bank that has cash it needs to invest overnight, and a hedge fund that has Treasury bonds but needs cash. They strike a deal: the fund gives the bank the Treasuries as collateral in exchange for cash, and the next morning reverses the trade, paying a small interest rate for the overnight use of the money. That transaction is called a repurchase agreement, or “repo,” and the interest rate on it is what SOFR measures.
What makes SOFR distinct is its size. The repo market moves more than a trillion dollars a day. The New York Fed’s published SOFR rate each morning is a volume-weighted median of that enormous pool of real trades. It is not a survey, not an estimate, not a forward-looking guess — it is the middle transaction of trillions of dollars that actually changed hands the day before. That structural depth is why regulators and industry groups chose SOFR as the successor to LIBOR, and why it now underpins more financial contracts than any other U.S. benchmark rate. For live readings alongside Fed funds, Treasury yields, and prime, see our Fed prime rate dashboard.
How SOFR Is Calculated (the Repo Market Mechanism)
The calculation pulls data from three specific segments of the Treasury repo market, combined into one rate. First, tri-party repo transactions cleared through Bank of New York Mellon — these are high-volume trades between large dealers and money market funds. Second, GCF Repo transactions cleared through the Depository Trust & Clearing Corporation (DTCC) — these connect dealers to one another. Third, bilateral Treasury repo trades cleared through the Fixed Income Clearing Corporation’s (FICC) Delivery-versus-Payment service — direct trades between institutional counterparties.
The New York Fed and the U.S. Treasury’s Office of Financial Research collect transaction-level data from those three pipelines each business day. A filter strips out “specials” — repos where cash lenders accept below-market rates because they want a specific Treasury security as collateral. What’s left is the broad general collateral market. The final SOFR rate is the volume-weighted median of those cleaned transactions, meaning every dollar borrowed is counted and the middle dollar determines the rate. A rate manipulator would need to move a meaningful share of over a trillion dollars in actual trades to nudge the number, which is effectively impossible. That is SOFR’s core advantage over LIBOR, which was a survey of what banks said they could borrow at, with no real-trade requirement at all.
The Three Flavors: Overnight, Averages, and Term SOFR
When a loan document references “SOFR,” the next question is always: which SOFR? Three distinct versions exist, and they are used for very different products.
Overnight SOFR. The raw daily rate published by the New York Fed each morning. It is the purest form of the benchmark and the one referenced in most derivatives, interbank lending, and overnight funding markets. Overnight SOFR can be volatile on particular days — month-ends, quarter-ends, tax-filing dates, and Treasury auction settlement dates can all push it up or down by 5 to 25 basis points temporarily.
SOFR Averages. Compounded averages of overnight SOFR over 30, 90, and 180 calendar days. These are also published by the New York Fed. The 30-day average SOFR is the most commonly referenced version for adjustable-rate mortgages, student loans, and consumer credit products, because it smooths out the daily volatility. Importantly, these averages are calculated “in arrears” — meaning the 30-day average SOFR published today reflects the actual overnight rates from the past 30 days, not a projection of the next 30.
Term SOFR. Forward-looking rates for 1-month, 3-month, 6-month, and 12-month tenors, published by CME Group. Term SOFR is derived from SOFR futures markets and gives borrowers and lenders a rate they can “know in advance” for an upcoming period — similar to how 3-month LIBOR used to work. Term SOFR has been available since July 2021. ARRC’s best-practice recommendation is to keep Term SOFR use limited to cash products (loans) rather than derivatives, to preserve the integrity of the underlying futures market.
If your ARM or student loan references “30-day average SOFR” (the most common convention for consumer products), you do not need to check the rate daily. Your index is recalculated only on your contract’s reset date, using whatever the 30-day average happened to be on the day before. For a loan resetting in 60 days, the overnight SOFR spikes that dominate financial headlines today are largely irrelevant — only the accumulated rolling average matters. Check the New York Fed’s 30-day average SOFR series a week before your reset date to project your new payment accurately.
Why LIBOR Had to Go — and Why SOFR Won
LIBOR was the London Interbank Offered Rate — once the benchmark for over $200 trillion of global financial contracts. It worked like this: every morning, a panel of 16 to 18 major banks would submit an estimate of what they thought it would cost them to borrow unsecured from another bank at several different maturities. The administrator would throw out the highest and lowest estimates and average the middle values. That average became the published LIBOR rate.
Two things went fatally wrong. First, after the 2008 financial crisis, interbank lending collapsed — banks stopped lending to each other unsecured because they no longer trusted counterparty creditworthiness. That meant LIBOR submitters were estimating a rate for a market that had essentially stopped existing. Second, and more scandalously, multiple investigations between 2012 and 2015 revealed that panel banks had been systematically manipulating their LIBOR submissions to benefit their own derivative trading positions. Billions in fines were paid by Barclays, UBS, RBS, Deutsche Bank, and others.
In 2014, the Federal Reserve convened the Alternative Reference Rates Committee (ARRC) — a group of regulators and private-sector market participants tasked with finding a replacement. After three years of review, ARRC selected SOFR in June 2017, specifically because its foundation in a $1 trillion-plus daily transaction market made manipulation effectively impossible. In March 2021, the U.K.’s Financial Conduct Authority formally announced that all remaining USD LIBOR panels would cease after June 30, 2023. The transition mobilized an industry effort that the ARRC’s own closing report described as “billions of dollars, millions of hours of work by the private sector, active involvement by the U.S. official sector, and even legislation by Congress.” The 2022 LIBOR Act gave the Federal Reserve Board authority to impose SOFR-based replacement rates on “tough legacy” contracts — those without workable fallback language — governed by U.S. law. For the practical differences between SOFR, Fed funds, and prime, see our prime rate vs federal funds rate vs SOFR explainer.
How SOFR Shows Up in Your Loans
The way to spot a SOFR-indexed loan is to read the rate description on the note. If you see “SOFR + [margin]” or “30-day average SOFR + [margin],” your loan is tied to SOFR. Here’s how it plays out on three common consumer products.
Adjustable-rate mortgages (ARMs). Most post-2023 ARMs are indexed to 30-day average SOFR plus a margin typically in the 2.25% to 3.00% range. On a 7/1 ARM with a starting rate of 5.50%, once the fixed period ends the new rate equals 30-day average SOFR on the reset date plus your margin. With 30-day average SOFR at roughly 3.72% and a 2.75% margin, a reset happening this week would produce an adjusted rate of about 6.47%. The mortgage’s rate cap structure (typically 2% per adjustment, 5% lifetime) limits how far that can actually move in a single reset — but SOFR’s path over 7 years determines how close you come to the ceiling. For full mechanics on HELOC and ARM pricing, see our HELOC rates page.
Private student loans. Nearly all variable-rate private student loans originated after LIBOR cessation reference 30-day average SOFR plus a margin ranging from 1.00% to 11.00% depending on credit profile. A borrower with a 750 FICO carrying a $40,000 loan at “30-day SOFR + 3.00%” currently pays roughly 6.72%. If SOFR rises 50 basis points over the next year — as it might if the Fed holds rates longer than expected — the effective rate rises to 7.22% and the annual interest cost rises by about $200 on that balance.
Business lines of credit and SBA floating-rate loans. Most institutional and small-business variable-rate loans reference Term SOFR (1-month or 3-month) plus a credit spread adjustment plus a lender margin. A SBA 7(a) variable-rate loan, for example, may reference “Term SOFR + 0.26% spread adjustment + 2.50% lender margin” — a stacked formula that resets monthly or quarterly. The 0.26% spread adjustment is the standardized ARRC-recommended figure that bridges the old historical gap between 1-month LIBOR and 1-month Term SOFR. For how this interacts with the prime rate on bank-sourced loans, see how Fed rate decisions affect your loans and the current prime rate.
When reading the fine print on a SOFR-indexed loan, check five things. (1) Which SOFR — overnight, 30-day average, or Term? The reset mechanics differ materially. (2) What is the reset frequency — monthly, quarterly, or annually? (3) What is the lookback period — some loans use the SOFR from a few business days before the reset to allow billing cycles to calculate in time. (4) What is the rate cap structure — per-reset and lifetime? (5) Is there a floor rate — many SOFR-indexed loans include a provision preventing the rate from falling below a stated minimum, often 0.25% to 1.00%, which can matter a lot in a cutting cycle.
SOFR vs the Federal Funds Rate vs the Prime Rate
These three rates are often lumped together as “short-term rates,” but they measure different things and move differently day-to-day.
Federal funds rate. The rate banks charge each other for overnight unsecured reserve loans at the Fed. The FOMC sets a target range (currently 3.50% to 3.75%), and the Fed uses tools like interest on reserve balances and reverse repo facilities to keep the effective rate inside that range. The Fed funds rate is a policy tool — it only moves when the FOMC votes to move it.
SOFR. A market rate from actual secured repo transactions. It typically tracks within 5 to 15 basis points of the effective federal funds rate but moves daily based on repo supply and demand. SOFR at 3.72% and Fed funds in the 3.50% to 3.75% range, as of mid-April 2026, shows the usual close-but-not-identical relationship.
Prime rate. A retail banking benchmark that sits at the Fed funds target range upper bound plus exactly 3.00% by convention. When the Fed cuts by 25 basis points, prime drops 25 basis points on the same day at virtually every U.S. bank. Prime is used for credit cards, HELOCs, most variable-rate personal loans, and many small-business bank credit lines. SOFR is used for more institutional products — ARMs, private student loans, derivatives, and corporate credit facilities. For side-by-side live readings, see our U.S. interest rates dashboard, and for the definitional differences between each benchmark, our prime rate vs APR vs interest rate vs federal funds rate breakdown.
How to Track SOFR Yourself (Free .gov Tools)
You do not need a Bloomberg terminal or a broker account to follow SOFR. Every piece of underlying data is published free by the New York Federal Reserve and mirrored in the St. Louis Fed’s FRED database.
New York Fed reference rates page. The authoritative source. Overnight SOFR, 30-day average SOFR, 90-day average SOFR, 180-day average SOFR, and the SOFR Index are all published at approximately 8:00 AM Eastern Time each business day. This is the same data that every loan servicer, ARM calculator, and bank uses.
FRED SOFR series. The St. Louis Fed maintains free, downloadable, charting-ready time series for every SOFR variant dating back to April 2018 when SOFR first began publishing. The three most useful series are SOFR (overnight), SOFR30DAYAVG (30-day average), and SOFRINDEX (the cumulative index value). Each has a chart, a data download, and a free email notification option when new values are released.
CME Group Term SOFR page. For the forward-looking Term SOFR rates used in commercial loans — 1-month, 3-month, 6-month, and 12-month tenors — CME Group publishes the official Term SOFR rates at 6:00 AM Chicago time each business day and makes them freely available. The ARRC and the NY Fed Reference Rate Market page provide direct links. For how these rates feed into specific Fed policy decisions and the dot plot, see our guide to reading the Fed dot plot and the related yield curve inversion explainer.
Frequently Asked Questions
What is SOFR?
SOFR, the Secured Overnight Financing Rate, is a benchmark interest rate measuring the cost of borrowing cash overnight against U.S. Treasury collateral in the repo market. It is published every business day by the Federal Reserve Bank of New York at approximately 8:00 AM Eastern Time, based on actual transactions totaling more than $1 trillion per day. SOFR replaced LIBOR as the primary U.S. benchmark rate after the final USD LIBOR panels ceased on June 30, 2023.
What is the current SOFR rate?
As of April 15, 2026, overnight SOFR stands at 3.72%. The 30-day average SOFR, which smooths daily volatility and is used on most consumer products like adjustable-rate mortgages and private student loans, runs close to that level. The New York Fed publishes fresh SOFR readings every business day at approximately 8:00 AM Eastern Time.
How is SOFR different from LIBOR?
SOFR is based on actual transactions in the secured Treasury repo market — more than $1 trillion in real trades each day. LIBOR was a survey of banks’ estimates of what they thought they could borrow at, with no real-trade requirement. That structural difference made LIBOR vulnerable to manipulation scandals that surfaced from 2012 onward, and ultimately led to its replacement. SOFR is also secured (backed by Treasury collateral) while LIBOR was unsecured interbank borrowing.
How is SOFR calculated?
The New York Fed collects transaction-level data from three segments of the Treasury repo market each business day: tri-party repo trades through Bank of New York Mellon, GCF Repo trades through DTCC, and bilateral Treasury repo trades through FICC’s Delivery-versus-Payment service. After filtering out “specials” (repos for specific Treasury issues), the rate is calculated as a volume-weighted median of the remaining transactions. The median is taken across over $1 trillion in combined daily volume.
What is the difference between overnight SOFR and Term SOFR?
Overnight SOFR is a single day’s realized rate — the volume-weighted median of actual overnight repo trades. Term SOFR is a forward-looking rate for a specific period (1-month, 3-month, 6-month, or 12-month), derived from SOFR futures markets and published daily by CME Group. Term SOFR lets borrowers and lenders know their rate “in advance” for the upcoming period, similar to how 3-month LIBOR used to work. ARRC recommends keeping Term SOFR use mainly to cash products (loans), not derivatives.
Who publishes SOFR?
The Federal Reserve Bank of New York publishes overnight SOFR, the 30-day, 90-day, and 180-day SOFR averages, and the SOFR Index every business day at approximately 8:00 AM Eastern Time. The calculation is produced in cooperation with the U.S. Treasury’s Office of Financial Research. CME Group, a separate entity, publishes the forward-looking Term SOFR rates under ARRC recommendation. All of this data is freely available on the NY Fed’s reference rates page and mirrored in the St. Louis Fed’s FRED database.
How does SOFR affect my mortgage or student loan?
If your adjustable-rate mortgage or private student loan is indexed to SOFR, your effective rate equals the referenced SOFR version (typically 30-day average SOFR) plus your lender’s margin. When SOFR rises, your rate rises at the next reset; when it falls, your rate falls. Most consumer SOFR-indexed loans reset monthly or annually. Rate caps, floors, and lookback periods in the note determine exactly how much your payment can move at each reset. Loans originated before 2023 and referencing LIBOR have since been converted to SOFR-based replacement rates under the 2022 LIBOR Act.
Next Steps: Putting SOFR to Work on Your Loans
If you have an ARM, HELOC, private student loan, or variable-rate business credit line, the first step is simply opening the loan documents and looking up which SOFR version is referenced and what your margin is. Those two pieces of information — index + margin — are all you need to project your next reset. The second step is bookmarking the New York Fed’s reference rates page or the FRED SOFR30DAYAVG series so you can check in before major Fed decisions or ahead of your reset dates. A few minutes of attention on your end can produce materially better borrowing decisions over the life of a long loan.
For a live view of all relevant benchmarks at once, see the U.S. interest rates dashboard. To project exactly how a SOFR move translates to dollars on your specific balance, try the prime rate impact calculator (same math applies to SOFR-indexed loans). And to see where the Fed expects short-term rates to sit by year-end, read the Fed rate forecast for 2026.
References
- Federal Reserve Bank of New York. “Secured Overnight Financing Rate Data.” newyorkfed.org
- Federal Reserve Bank of New York. “Alternative Reference Rates Committee — Transition from LIBOR.” newyorkfed.org
- Federal Reserve Bank of St. Louis (FRED). “Secured Overnight Financing Rate (SOFR).” fred.stlouisfed.org
- Federal Reserve Bank of St. Louis (FRED). “30-Day Average SOFR (SOFR30DAYAVG).” fred.stlouisfed.org
- Alternative Reference Rates Committee. “ARRC Closing Report: Final Reflections on the Transition from LIBOR.” newyorkfed.org
- U.S. Federal Register. “Additional Guidance on the Transition From Interbank Offer Rates to Other Reference Rates.” federalregister.gov
Keep Reading
- Fed Prime Rate Dashboard – Federal Funds Rate, SOFR & Treasury Yields
- Current U.S. Prime Rate Today
- Prime Rate vs. Federal Funds Rate vs. SOFR: What Borrowers Need to Know
- Prime Rate vs APR vs Interest Rate vs Federal Funds Rate
- U.S. Interest Rates Today
- HELOC Rates: How Home Equity Lines of Credit Are Priced
- How to Read the Fed Dot Plot
- Yield Curve Inversion Explained
