What is a home loan interest rate lock?

Rates and Fees verified correct on December 11th, 2016

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 11th, 2016
$
Loan purpose
Offset account
Loan type
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Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
ANZ Fixed Rate Home Loan - 1 Year Fixed (Owner Occupier)
A flexible fixed home loan with 100% offset account and rate lock for a maximum of 90 days.
4.54% 5.24% $600 $10 monthly ($120 p.a.) 95% More info
Illawarra Home Loans First Home Fast Track Home Loan - 3 Year Fixed
Enjoy a three year fixed rate home loan with a high maximum LVR.
4.13% 4.43% $0 $0 p.a. 95% More info
Illawarra Home Loans First Home Fast Track Home Loan -  1 Year Fixed
Fix in a rate for one year with a loan without annual or monthly fees.
4.13% 4.38% $0 $0 p.a. 95% More info
Commonwealth Bank Fixed Rate Home - 1 Year Fixed Rate (Owner Occupier)
Enjoy a rate lock feature for up to 90 days at any time during the application process.
4.54% 5.30% $600 $8 monthly ($96 p.a.) 90% More info
Commonwealth Bank Wealth Package Fixed Home Loan - 2 Year Fixed (Owner Occupier)
Fix in a rate for two years and enjoy options such as interest only repayments, split rates and more.
3.99% 5.00% $0 $395 p.a. 95% More info
ANZ Fixed Rate Home Loan - 5 Year Fixed (Owner Occupier)
A fixed rate home loan with a high LVR, additional repayments and a rate lock for loans of up to $1 million.
4.74% 5.12% $600 $10 monthly ($120 p.a.) 95% More info
Illawarra Home Loans First Home Fast Track Home Loan - 2 Year Fixed
Make up to $20,000 with this loan, plus get rate lock features and a full offset account.
4.13% 4.38% $0 $0 p.a. 95% More info
Commonwealth Bank Fixed Rate Home - 5 Year Fixed Rate (Owner Occupier)
Select a rate lock at any stage before funding and settlement with this loan.
4.74% 4.16% $600 $8 monthly ($96 p.a.) 90% More info
St.George Fixed Rate Home Loan - 3 Year Fixed Rate (Owner Occupier)
Take advantage of a rate lock of up to 3 months and other features such as a partial offset account.
4.24% 5.21% $600 $10 monthly ($120 p.a.) 95% More info
Westpac Fixed Options Home Loan Premier Advantage Package - 2 Years
A range of discounts is offered as part of this fixed package loan.
3.99% 4.97% $0 $395 p.a. 95% More info
NAB Choice Package Home Loan - 3 Year Fixed (Owner Occupier)
Get a range of discounts plus a flexible fixed rate home loan.
3.89% 4.84% $0 $395 p.a. 95% Go to site More info
Commonwealth Bank Wealth Package Fixed Home Loan - 3 Year Fixed (Owner Occupier)
A flexible fixed rate home loan with a rate lock of up to 90 days.
4.09% 4.96% $0 $395 p.a. 95% More info
Commonwealth Bank Fixed Rate Home - 3 Year Fixed Rate (Owner Occupier)
Enjoy a fixed rate home loan with additional features such as extra repayments.
4.24% 5.10% $600 $8 monthly ($96 p.a.) 90% More info
Westpac Fixed Options Home Loan Premier Advantage Package - 1 Year
A package loan which has a rate lock and can be used for building.
4.39% 5.07% $0 $395 p.a. 95% More info
NAB Choice Package Home Loan - 5 Year Fixed (Owner Occupier)
A package loan with a range of rebates and options.
4.59% 5.02% $0 $395 p.a. 95% Go to site More info
Westpac Fixed Options Home Loan - 2 Years
A flexible home loan which allows you to lock a rate up to 2 days before you settle.
4.19% 5.25% $600 $8 monthly ($96 p.a.) 95% More info
Illawarra Home Loans First Home Fast Track Home Loan - 5 Year Fixed
A full offset account and additional repayments, as well as a rate lock feature are available on this loan.
4.63% 4.83% $0 $0 p.a. 95% More info
St.George Fixed Rate Home Loan - 1 Year Fixed Rate (Owner Occupier)
A flexible home loan with a rate fixed for one year.
4.54% 5.43% $600 $10 monthly ($120 p.a.) 95% More info

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

A passionate publisher who loves to tell a story. Learning and teaching personal finance is his main lot at finder.com.au. Talk to him to find out more about home loans.

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