11 July 2026 · Risk Free Rates Team
What Is SOFR? Meaning, Today's Rate & How It Works (2026)
SOFR is the US benchmark rate that replaced LIBOR. See how the NY Fed calculates it, check today's rate, and calculate SOFR loan interest free — no sign-up.
Last updated 13 July 2026.
What Is SOFR?
SOFR stands for the Secured Overnight Financing Rate. It's the benchmark interest rate for US dollar (USD) lending markets, published each business day by the Federal Reserve Bank of New York. SOFR measures the cost of borrowing cash overnight, using US Treasury securities as collateral — which is why it's called "secured."
SOFR replaced LIBOR as the primary USD benchmark on 30 June 2023, when all remaining USD LIBOR panels ceased publication. If you're unfamiliar with why that transition happened, see our full guide to the LIBOR-to-SOFR transition.
SOFR belongs to a broader family of risk-free rates (RFRs) that regulators introduced worldwide after the LIBOR scandal — the UK uses SONIA, and the Eurozone uses €STR.
How Is SOFR Calculated?
The New York Fed calculates SOFR each morning using actual transaction data from three segments of the US Treasury repurchase (repo) market:
- Tri-party repo transactions cleared through Bank of New York Mellon
- Bilateral Treasury repo transactions cleared through the Depository Trust & Clearing Corporation (DTCC)
- GCF Repo transactions (General Collateral Finance) between dealers
The rate is the volume-weighted median of all eligible transactions, which typically exceeds $1 trillion per day in notional value. Because SOFR is based on real transactions rather than bank estimates (as LIBOR was), it is far more difficult to manipulate.
SOFR is published at approximately 8:00 AM Eastern Time each business day and represents the prior business day's activity. You can check the current published rate directly on the New York Fed's official SOFR page — we don't quote a live figure here since it updates daily. The NY Fed also publishes a running SOFR Index, which lets you calculate a compounded average rate over any custom period without compounding each daily fixing by hand.
Types of SOFR
There are several variants of SOFR used in financial contracts:
| Variant | Description | Common Use |
|---|---|---|
| Overnight SOFR | Single-day rate, published daily by NY Fed | Floating-rate loans, derivatives |
| 30-Day Average | Rolling 30-day compounded average | Loan interest resets |
| 90-Day Average | Rolling 90-day compounded average | Loan interest resets |
| 180-Day Average | Rolling 180-day compounded average | Loan interest resets |
| Term SOFR | Forward-looking rate (1M, 3M, 6M, 12M) | Syndicated loans, bonds |
Term SOFR is published by CME Group and represents the market's expectation of overnight SOFR over a given period. Unlike overnight SOFR, Term SOFR is known at the start of the interest period — making it familiar to borrowers who were accustomed to LIBOR. For a full breakdown of when each applies, see our guide to Term SOFR vs. Overnight SOFR.
SOFR vs LIBOR: Key Differences
| Feature | SOFR | LIBOR |
|---|---|---|
| Basis | Secured (Treasury collateral) | Unsecured |
| Source | Real transactions (~$1T/day) | Expert bank estimates |
| Availability | End-of-day (prior day) | Set at start of day |
| Term structure | Forward-looking Term SOFR (licensed) | Built-in (1M, 3M, 6M, 12M) |
| Day count | Act/360 | Act/360 (USD) |
| Credit component | None (risk-free) | Embedded bank credit risk |
Because SOFR is secured and risk-free, it is structurally lower than LIBOR. When LIBOR-based contracts transition to SOFR, a credit adjustment spread (CAS) is added — typically 26 bps for 3M, 43 bps for 6M — to compensate for the difference.
SOFR vs SONIA: Key Differences
SOFR and SONIA are both risk-free overnight rates, but they aren't interchangeable — they're benchmarks for entirely different currencies, built and used slightly differently:
| Feature | SOFR (USD) | SONIA (GBP) |
|---|---|---|
| Currency | US Dollar | British Pound Sterling |
| Administrator | Federal Reserve Bank of New York | Bank of England |
| Basis | Secured (Treasury repo collateral) | Unsecured overnight interbank/institutional borrowing |
| Day count | Actual/360 | Actual/365 |
| Term rate | Term SOFR widely used (business loans) | No widely-used forward-looking term rate — market uses Compounded SONIA in arrears |
| Compounded index | SOFR Index (since March 2020) | SONIA Compounded Index (since August 2020) |
In short: SOFR is secured and denominated in US dollars, while SONIA is unsecured and denominated in sterling — and their day count conventions differ (Act/360 vs Act/365), which matters if you're comparing loans priced in the two currencies. See our full guide to SONIA for how it works in GBP loans.
SOFR vs the Fed Funds Rate
These two are easy to confuse, but they're not the same thing. The federal funds rate is the interest rate at which banks lend reserve balances to each other overnight, unsecured, and it's the rate the Federal Reserve directly targets through monetary policy (the FOMC sets a target range). SOFR, by contrast, is a secured rate derived from the Treasury repo market — it isn't set by the Fed, but it moves in the same general direction as Fed policy since both reflect the overnight cost of cash in the financial system.
In practice, SOFR tends to track closely just below or around the effective fed funds rate, though the two can diverge slightly around quarter-end and other periods of repo market stress. Fed policy decisions — like the ones covered in our posts on the June 2026 FOMC decision and the July 2026 FOMC minutes — are one of the main drivers of where SOFR sits over time, since they set the broader interest rate environment SOFR operates within.
How SOFR Is Used in Loans
Most commercial and syndicated loans use Compounded SOFR in Arrears: overnight SOFR rates are compounded daily over the interest period, and the total interest is only known at the end of the period. A lookback period (typically 5 business days) shifts rate observations earlier so the lender can calculate the interest bill before the payment date.
Some loans — particularly bilateral facilities — use Term SOFR, which is set at the start of the period like LIBOR was.
The standard day count convention for USD SOFR loans is Actual/360, the same as USD LIBOR. For a full breakdown of how day count conventions affect your interest calculation, see our guide to day count conventions explained.
Key Dates
- 5 March 2021 — FCA confirmed all LIBOR panels would cease
- 31 December 2021 — Most non-USD LIBOR tenors ceased
- 30 June 2023 — All remaining USD LIBOR panels ceased
- SOFR available from — 3 April 2018
Frequently Asked Questions
What does SOFR stand for? SOFR stands for the Secured Overnight Financing Rate — the US dollar benchmark interest rate published daily by the Federal Reserve Bank of New York.
Is SOFR the same as the Fed funds rate? No. SOFR is a secured rate based on Treasury repo transactions, while the fed funds rate is an unsecured rate that the Federal Reserve directly targets. They move together broadly but aren't identical.
Who publishes SOFR? The Federal Reserve Bank of New York publishes SOFR each business day at approximately 8:00 AM Eastern Time, based on the prior business day's repo market transactions.
Is SOFR fixed or does it change daily? Overnight SOFR changes daily. Term SOFR (1M, 3M, 6M, 12M) is fixed for the length of the chosen term once set at the start of a period.
Why did SOFR replace LIBOR? LIBOR was based on estimates submitted by a panel of banks rather than actual transactions, which made it vulnerable to manipulation — as seen in the LIBOR scandal. Regulators worldwide moved to transaction-based, risk-free rates like SOFR, SONIA, and €STR instead. See our LIBOR to SOFR transition guide for the full history.
What is today's SOFR rate? See our current & historical SOFR rates page for the latest published rate and an interactive chart, updated daily straight from the New York Fed. You can also check the New York Fed's official SOFR page directly, or use our RFR Loan Calculator to run a live loan calculation using up-to-date rate data.
Where can I find historical SOFR rates? Our rates page has an interactive historical SOFR chart back to its 3 April 2018 launch, sourced directly from the New York Fed. The SOFR Index lets you derive a compounded average rate between any two historical dates, and our RFR Loan Calculator generates a full daily rate ledger for whatever historical loan period you enter, exportable to Excel.
What is the difference between SOFR and SONIA? SOFR is the US dollar risk-free rate (secured, Actual/360 day count, administered by the NY Fed); SONIA is the British pound risk-free rate (unsecured, Actual/365 day count, administered by the Bank of England). See the comparison table above, or our full guide to SONIA, for details.
Calculate Your SOFR Loan
Use our free RFR Loan Calculator to calculate interest on any SOFR-based loan — compounded in arrears or Term SOFR — with full daily rate ledger and Excel export. You can also browse our full blog for more on SONIA, €STR, and how Fed policy affects borrowing costs.