Do rising mortgage rates have you worried? As mortgage rates increase many buyers are asking about a “rate lock”. A rate lock is a lender’s promise to hold a specific interest rate for you for a set period of time, usually somewhere between 15 and 60 days, while your loan moves through underwriting and closing. Once you lock, that rate is protected from market movement, so if rates jump the next week, you’re still getting the number you locked in. The trade-off is that it usually cuts both ways: if rates drop instead, you have the committed locked rate unless your lender offers a “float-down” option, which lets you capture a lower rate for a fee or under specific conditions.
Lenders price in some cost for taking on that risk, and it often shows up as a slightly higher rate or in points compared to a shorter or unlocked scenario. Generally, the longer the lock period, the more expensive it is since the lender is exposed to market risk for longer. A 15-day lock is cheaper than a 60-day lock, for instance, so borrowers usually want to lock for a period that comfortably covers their expected closing timeline without paying for extra days they don’t need.
Timing matters too. Lock too early and your rate could expire before closing, forcing an extension (often at a cost) or a re-lock at current market rates. Lock too late and you’re exposed to any rate increases that happen between application and closing. Given where rates are right now, hovering in the high-6% range and bouncing around a bit as markets digest jobs and inflation data, a lot of borrowers with closings on the horizon are choosing to lock sooner rather than gamble on further increases, though that’s obviously a personal risk call rather than something with one right answer.
One more nuance: a lock is generally tied to the specific loan terms you applied with. If your loan amount, credit profile, property, or loan type changes materially before closing, the lender can re-price or void the lock. So, it’s worth avoiding big financial changes (like opening new credit or changing jobs) once you’ve locked in.