What is an interest rate lock?

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Written by James Hurwood
Reviewed by Stephen Zeller
Updated 28 June 2024

Fixed rate home loans explained

Learn everything you need to know about fixed rate home loans with Selling Houses Australia host, Andrew Winter.
Andrew Winter
Home Loans

Expert tips for considering a home loan interest rate lock

Our General Manager of Money, Stephen Zeller, thinks a rate lock option can be an invaluable tool for fixed-rate borrowers – if understood and used properly. With that in mind, he has some tips for prospective homebuyers considering locking their rate in.

Stephen Zeller
General Manager – Money

Don’t forget the lock fee!

Locking your rate in could potentially save you money in interest repayments if rates were to go up ahead of your settlement date. That being said, paying for a rate lock may not always be worth your while. Rate locks are typically calculated as a small percentage of the overall loan value – if your home loan is on the larger side, a rate lock could cost you more than it’ll save you.

Consider the interest rate environment

Rate locks are designed to protect the borrower against interest rates going up, but if rates go down after you’ve locked yours in, you’ll have paid money for the privilege of losing more money. With this in mind, you may want to do some research into recent rate movements and do your best to figure out which direction rates might be headed in next. That way, you can make a more informed decision about whether a rate lock is appropriate for you or not.

We’re here to help!

If you’re not sure whether a fixed rate lock could be appropriate for you, our Home Loan Specialists are on-hand and ready to answer any questions you might have about rate locks and how they work. You can either give us a call on 1800 737 434 or book in for a video call with one of our lending specialists today!

Interest rate locks explained

What is a rate lock and how do they work?

Do rate locks expire?

Is there a fee for locking my interest rate?

Can I cancel a rate lock?

How do I apply to lock my rate?

Could a rate lock benefit you?

Should I lock in my interest rate?

When should I consider locking my rate?

Who’s eligible for a rate lock?

What if interest rates drop after I’ve locked my rate?

Pros and cons of locking your rate

Meet our home loans expert, Stephen Zeller

Stephen Zeller
General Manager – Money

Stephen has more than 30 years of experience in the financial services industry and holds a Certificate IV in Finance and Mortgage Broking. He’s also a member of both the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) and the Mortgage and Finance Association of Australia (MFAA).

Stephen leads our team of Home Loan Specialists, and reviews and contributes to Compare the Market’s banking-relating content to ensure it’s as helpful and empowering as possible for our readers.