Rate Lock

Updated: Aug 4, 2021

Rate lock is an option offered by some banks and lenders that locks in the interest rate offered when you applied for the loan so you are not affected if interest rates move before your loan is settled.

How Rate Lock Works

Interest rates may rise or fall from the time you agree to proceed with the loan.

For example, you see that a bank has a fixed rate home loan for 4%. Prior to settlement the rate could rise to 4.3% or fall to 3.7%. By choosing a rate lock option the interest rate you locked in at application would be applied to your loan when it settles.

Most lenders will allow you to take the lower rate if interest rates fall however that is not the case with all lenders and some may apply the higher rate you locked in to prior to settlement.

Rate lock normally lasts for a specified period and will be different for each lender. Normally this may be 60 days or 3 months. It is usually better to rate lock for the maximum period to ensure you are covered in the event the approval and settlement of you loan takes longer than anticipated.

Rate Lock Fees

Most lenders charge a fee for rate lock and the fee will vary from lender to lender. Some charge a set $ fee and others will charge a percentage of the amount you are borrowing i.e. 0.15% of a $400,000 loan would incur a $600 fee.


Speak to your mortgage broker today about rate lock.


Kind Regards,


The Newstead Group Team

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