Floating rate debt is a headache. Honestly, if you're looking at the daily simple SOFR rate today, you’re probably either a corporate treasurer trying to price a loan or a homebuyer wondering why your ARM is behaving strangely.
As of January 15, 2026, the market is seeing some pretty interesting movements. Yesterday, January 14, the overnight SOFR rate sat at 3.64% or 3.65%, depending on which ticker you caught first. But here is the thing: the "daily simple" version isn't just one number you grab off a screen and call it a day. It’s a process.
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The Number Everyone Is Watching
The Secured Overnight Financing Rate (SOFR) isn't just a guess by a bunch of bankers in a mahogany-paneled room. It's based on actual transactions. Specifically, it's the cost of borrowing cash overnight when you're using U.S. Treasuries as collateral.
Right now, the 30-day average is hovering around 3.70%.
Why does that matter? Because while the "overnight" rate jumps around daily, most loans use a "daily simple" calculation over a period. You don't just pay today's rate; you pay the average of the rates over your interest period. If you’ve got a $10 million credit line, a few basis points (that’s 0.01% for the uninitiated) can mean thousands of dollars.
Daily Simple SOFR vs. Compounded: Why It Matters
Most people hear "SOFR" and assume it's like LIBOR used to be. It's not.
Daily simple SOFR is basically just addition. You take the rate for each day in the period, add them up, and divide by the number of days. No interest-on-interest. No compounding. It’s straightforward, which is why a lot of syndicated loans and mid-market deals prefer it.
Then there's compounded SOFR. That one is a bit more aggressive. It factors in interest on the interest that accrued the day before. Over a 30-day period, the difference between simple and compounded might look like a rounding error, but over a year? It adds up.
Most bank systems are finally—finally—built to handle both, but honestly, simple is still the king of convenience for corporate loans.
What Is Driving the Rate Today?
The Federal Reserve Bank of New York publishes the rate every morning around 8:00 AM ET. If you see a spike, it’s usually because of "repo market" pressure.
Basically, when everyone needs cash at the same time—like on tax payment dates or at the end of a quarter—the rate to borrow that cash goes up. Since SOFR is based on these repo trades, it reflects that hunger for liquidity immediately.
- January 13, 2026: 3.65%
- January 12, 2026: 3.64%
- January 9, 2026: 3.64%
You’ll notice it’s remarkably stable right now. We aren't seeing the wild 5% peaks of a couple of years ago, but we aren't at the "free money" 0% levels either. We’re in this "new normal" where 3.5% to 4% is the playground.
How to Calculate Daily Simple SOFR for a Loan
If you're stuck doing this in a spreadsheet, don't overthink it.
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You take the daily rate (let's say 3.64%), multiply it by your principal, and then divide by 360 (the standard "day count" convention for most US business loans).
$$Interest = \frac{Principal \times Rate \times Days}{360}$$
If the rate changes tomorrow to 3.65%, you do the math for that day with the new number. Then you add all those daily amounts together at the end of the month. That’s your interest bill.
It’s called "in arrears" because you don't actually know your total bill until the month is over. This is the biggest pain point for CFOs who want to budget. They miss the old days of LIBOR where you knew your rate 30 days in advance.
Why Most People Get the "Daily Simple" Part Wrong
The biggest misconception is that "daily simple SOFR" is a fixed rate you can look up for the future. You can't.
There is something called Term SOFR (published by CME Group) which is forward-looking. If your loan says "Daily Simple SOFR," you are on a rollercoaster. A very slow, predictable rollercoaster, but a rollercoaster nonetheless. If the Fed hikes rates mid-month, your interest cost goes up that day.
Also, watch out for the "spread." Most loans are "SOFR + 1.50%" or something similar.
Back when the world switched from LIBOR to SOFR, there was a "Credit Spread Adjustment" (CSA) added to deals to make the math fair. These days, most new loans just bake that into the margin. If your banker is still talking about "CSA adjustments" on a 2026 loan, they might be living in the past.
Actionable Steps for Today
If you are managing debt or looking at a floating-rate product today, here is what you need to do:
- Check the NY Fed Website: Don't trust third-party blogs that might be 48 hours behind. The Federal Reserve Bank of New York is the only source of truth.
- Identify Your Lookback: Most daily simple SOFR loans have a "lookback" period (usually 5 days). This means today’s interest is actually calculated using the rate from five days ago. It gives the bank time to send you an accurate bill.
- Confirm Simple vs. Compounded: Look at your credit agreement. If it says "compounded," your interest will be slightly higher than the "simple" math suggests.
- Watch the Fed: Since SOFR tracks the Fed Funds Rate very closely, any "Fed speak" about interest rate cuts or hikes will move your daily simple SOFR rate almost instantly.
The days of cheap, predictable debt aren't coming back anytime soon, but at least with SOFR, the math is transparent. You're paying the market rate, not a number a few banks made up.