What is a home loan interest rate lock?

Avoid losing out on a great rate with a rate lock and save over the life of your loan.

Rate lock

Imagine comparing home loans and finally settling on the perfect loan with the right combination of fees, features and interest rates. You fill out your application and submit it, hopeful that the rate you’ve applied for won’t change in the time it takes for your loan to settle. Because the economy changes all the time - taking rates with it - a rate lock can help guarantee the rate you want.

A rate lock guarantees that you will receive the loan rate under the conditions that were advertised at the moment you applied for a loan. It usually covers you from rate changes for up to 90 days until settlement date. Using a rate lock means you can avoid the surprise of receiving a rate different to the one you applied for.

Rate locks are generally only offered on fixed rate home loans.

Fixed rate home loans with rate locks

Rates last updated December 14th, 2018
$
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
4.62%
4.66%
$330
$0 p.a.
95%
Enjoy a three year fixed rate home loan with a high maximum LVR.
4.04%
5.38%
$600
$8 monthly ($96 p.a.)
95%
Enjoy a rate lock feature for up to 90 days at any time during the application process.
4.31%
4.35%
$330
$0 p.a.
95%
Fix in a rate for one year with a loan without annual or monthly fees.
4.54%
5.16%
$600
$8 monthly ($96 p.a.)
95%
Select a rate lock at any stage before funding and settlement with this loan.
4.49%
4.53%
$330
$0 p.a.
95%
Make up to $20,000 with this loan, plus get rate lock features and a full offset account.
3.99%
4.86%
$0
$395 p.a.
95%
Get a range of discounts plus a flexible fixed rate home loan.
3.89%
5.01%
$0
$395 p.a.
95%
A flexible fixed rate home loan with a rate lock of up to 90 days.
4.00%
5.16%
$600
$10 monthly ($120 p.a.)
95%
Take advantage of a rate lock of up to 3 months and other features such as a partial offset account.
4.04%
5.15%
$600
$8 monthly ($96 p.a.)
95%
Enjoy a fixed rate home loan with additional features such as extra repayments.
4.24%
4.87%
$0
$395 p.a.
95%
A package loan with a range of rebates and options.
4.84%
4.88%
$330
$0 p.a.
95%
A full offset account and additional repayments, as well as a rate lock feature are available on this loan.
4.24%
5.42%
$600
$10 monthly ($120 p.a.)
95%
A flexible home loan with a rate fixed for one year.

Compare up to 4 providers

How does a rate lock work?

A rate lock is usually applied before a fixed rate home loan settles as it sometimes may take a certain time to process your home loan application. Once you lock in the rate, depending on the lender and the rate lock available, the rate you apply for will be locked in for up to 90 days before your loan settles. There’s usually a fee for this, and if during the rate lock period rates go down, most lenders will allow you to enjoy the lower rate - although you’ll still have to pay the rate lock fee. Some rates may be locked in at settlement, and with others it’s when the application is

Case study

Susan has been looking for her dream house for quite some time and finally has found one that suits her and her young family. Her husband and children are also thrilled with the idea of moving into a better, larger and more comfortable home that has a pool and a nice garden. She has applied for a fixed home loan with a rate of 4.50% fixed for three years, so she can create an accurate budget during this time. She decided that it would be wise to get a rate lock as well.

Some time after submitting the application, the rate for her loan rises to 5.05%. Because of her rate lock she has avoided a rate hike of 0.15%, meaning she is now saving more money on repayments each month.

Pros and cons of a rate lock

  • Pros

  • No surprises - You can apply for a fixed rate home loan and not worry about rates rising before your loan is approved.
  • If rates drop you can still benefit - If during the rate lock period rates drop, many lenders will still allow you to benefit from the lower rates. As always, check the terms and conditions.
  • Cons

  • Rate lock fees - Rate locks can cost between $300 to $750 and in some cases even more, so be sure to shop around, and try to get an idea of whether or not rates will be rising or falling so you know whether it’s worth the fee.

Things to consider about rate locks

When considering buying a home with a fixed rate home loan and using a rate lock, you should consult a financial planner or mortgage broker first. These kinds of professionals can tell you more about the prices on the market and will be able to tell you whether the rates might drop or rise in the short term. You should note that even with the best experts, it’s difficult to forecast where rates might be over the course of a year or even a month.

Also keep in mind that some fixed rate home loans have a free rate lock. Free rate locks are usually shorter than rate locks with fees, generally lasting for 60 days as opposed to 90 days. Still, a free rate lock could save you hundreds of dollars and guarantee that you receive the rate you apply for.

FAQ about rate locks

How long will the rate lock last for?

You can usually lock a rate in for 90 days before your loan settles.

What loans qualify for a rate lock?

A rate lock is generally only applicable on fixed rate home loans.

What if rates go down during the rate lock period?

Most lenders will enable you to enjoy the lower rates; however you will still have to pay the rate lock fee.

Marc Terrano

Marc Terrano is a Lead Publisher at finder. He's been writing and publishing personal finance content for over five years and loves to help Australians get a better deal.

Was this content helpful to you? No  Yes

Related Posts

Home Loan Offers

Important Information*
UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000

Take advantage of a low-fee mortgage with a special interest rate of just 3.59% p.a. and a 3.59% p.a. comparison rate.

HSBC Home Value Loan - (Owner Occupier P&I)

Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online. Available with just a 10% deposit.

loans.com.au Essentials - Variable (Owner Occupier, P&I)

A competitive interest rate home loan with interest only options. Interest rate 3.64% p.a.
comp rate of 3.66% p.a.

Tic:Toc Live in Loan Variable Rate - Principal & Interest

Get a very low interest rate and avoid big fees. Apply online for full approval in under 30 minutes and add a 100% offset account for $10 a month.

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.

2 Responses

  1. Default Gravatar
    February 20, 2018

    Do I need to pay rate lock if it goes over 90 days and I am unable to settle the property?

    • finder Customer Care
      MayMarch 12, 2018Staff

      Hi Peter,

      Thanks for your question.

      Locking your home loan interest rate usually comes with a fee. So if you’ve applied for it, yes, you still have to pay the fee even when you’re unable to settle your loan/it goes over 90 days. Contacting your lender directly is also best so they may be able to advise as to how much and when would the fee be charged.

      Cheers,
      May

Ask a question
Go to site