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Rate lock fees: when paying $750 to lock is worth it

Rate lock is insurance against an adverse rate move between application and settlement on a fixed-rate loan. Most lenders charge $500-$995 for the privilege, and the decision to pay for it is narrower than most brokers suggest.

What rate lock does

When you apply for a fixed-rate loan, the rate quoted is today’s rate. Settlement might be 60-90 days away. If the lender’s fixed rates drop in the interim, you usually get the lower rate anyway at settlement. If they rise, you pay the higher rate - unless you paid to lock.

The asymmetry matters

Rate lock only benefits you in a rising-rate scenario. In a flat or falling-rate environment, you have paid $750 for nothing. In a rising-rate environment where the fixed rate moves 25 bps against you on a $600k loan, the five-year cost of that 25 bps is about $7,500. The $750 lock fee has paid for itself 10x.

When to lock

  • You are fixing for 3-5 years: the longer the fix, the bigger the cost of an unfavourable move
  • Settlement is 60+ days out: more time for the market to shift
  • The RBA or market commentary suggests a hike is likely: rare in 2026’s cutting cycle, but worth reassessing per quote
  • You cannot absorb a higher rate: if your serviceability was marginal, a 25 bp move could push you over the line at the 3% buffer stress-test

When not to lock

  • Short settlements (under 30 days): too little time for meaningful movement
  • Cutting cycle: rates are more likely to fall than rise, so the lock is negative EV
  • You have a variable-rate backup: if rates go up, you switch to variable and absorb; the lock only helps if you are committed to fixed

Lender-specific quirks

  • CBA: $750 lock, valid 90 days, refunded if the loan doesn’t settle
  • Westpac: $750 lock, valid 90 days
  • NAB: 0.15% of loan amount (so $900 on $600k), valid 90 days
  • ANZ: $750, valid 90 days

Some non-major lenders offer free rate lock if you commit to specific products. Always ask.

For a falling-rate market, skip the lock. For a rising-rate market with a 60+ day settlement and a 5-year fix, pay it.