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What is a rate lock, and should I pay for one?
Bayley Clarke · Mortgage broker on the road · Last checked 3 September 2026 · 3 min read
The short answer
A rate lock is a fee you pay so the bank can't change the fixed rate on you between lodging your application and settlement. Without it, most banks give you whatever the fixed rate is on settlement day.
It's a bit cheeky, because it's kind of free money for the bank in the timing game. But it takes the guesswork out. Some banks honour the fixed rate from the day of approval and don't need one at all. For most, it's pay the fee or leave it up to chance.
The two minute version. The rest of this page is the detail underneath it.
The cheeky bit about fixed rates
The banks are very cheeky with the terms on which they offer you a fixed rate when you've applied and been approved. There are some exceptions, but the rule of thumb is that your fixed rate is only ever locked in on the day of settlement.
So say you go through the process with a bank because of the fixed rate they were advertising when you applied. If that fixed rate has moved by settlement day, your fixed rate is the settlement-day rate, even though you only went to them for the one you saw at the start. On a refinance that's a few weeks of exposure. On a purchase with a long settlement it can be months.
What a rate lock does
Rate lock takes that guesswork out of it. You pay a fee, a rate lock fee, so that once you've applied for the mortgage, the bank is not able to switch what the fixed rate will be on you and pull the rug from underneath you between lodging the application and settlement. Your fixed rate is locked in and will not change.
The fee is usually a small percentage of the loan amount or a flat charge, and it's typically only good for a set window, so on a long settlement you check that the lock actually covers the date. If rates fall in the meantime you generally don't get the lower one, which is the trade you're making for certainty.
The banks that don't need one
There are some banks that will honour the fixed rate based on when your loan was actually approved, which is great. You don't need to pay a rate lock fee, and that's the fixed rate you get. It's one of the things I check when we're choosing a lender for a fixed loan, because a bank that locks at approval for free can beat a bank with a slightly lower advertised rate and a fee on top.
For most banks, though, you do still need to pay the rate lock fee if you don't want to play the timing game. Whether you fix at all is its own question, and it's on should I go fixed or variable.
The honest bit: I don't love the product
I don't really like rate lock, because it's the bank charging you to keep the promise you thought they'd already made. But my opinion of it doesn't change the maths. If you're fixing because you want certainty, paying to make the certainty start on the day you apply is consistent.
If you're fixing on a bank that locks at approval anyway, don't pay for something you already have.
Fixing part of your loan and want the rate you actually saw?
A 30 minute call. I tell you which of the lenders I work with lock at approval, which ones charge to lock, and whether the fee is worth it on your settlement date.
No cost to you. The bank pays me when a loan settles. ยท How I get paid
Next question
Do I need to stay with my bank for a minimum period, and what does clawback mean?Fixed rates and break costs are the other side of the same coin.
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