Loan Lock in Australia 2025: Protect Your Interest Rate

With the Reserve Bank of Australia (RBA) signalling ongoing uncertainty around interest rates in 2025, more Aussies are looking at loan lock options to safeguard their finances. But what exactly is a loan lock, and should you consider locking in your rate this year?

What Is a Loan Lock and How Does It Work?

A loan lock—sometimes called a rate lock—gives borrowers the ability to secure a specific interest rate on their home loan application for a set period (typically 60–120 days). This protects you from any rate increases between applying for your loan and settlement. If the lender’s rates rise before your loan is finalised, you’ll still get the lower, locked-in rate.

• Typical lock period: 60–120 days

• Common fee: 0.15–0.25% of the loan amount (or a flat fee, e.g. $750)

• Applies to: Fixed-rate loans and sometimes variable loans (check with your lender)

For example, let’s say you’re buying a home in Melbourne, and your lender offers a fixed rate of 5.85% p.a. in March. If rates rise to 6.10% by April, your loan lock means you still get the 5.85% rate—potentially saving you thousands over the fixed term.

Why Are Loan Locks Popular in 2025?

After a rollercoaster few years for interest rates, many borrowers are worried about further hikes as the RBA continues to respond to global inflation and local economic pressures. In 2025, some banks have already adjusted fixed rates upward in anticipation of further RBA moves. This has made the loan lock feature more attractive, especially for those:

• Purchasing off-the-plan or with a long settlement

• Refinancing and concerned about processing delays

• Wanting certainty over their repayments in a volatile market

Data from the Australian Bureau of Statistics shows that fixed-rate loans have surged in popularity, with nearly 40% of new loans in early 2025 taking a fixed component. Many lenders, including the Big Four, are actively promoting rate lock options as a way to manage risk.

Key Considerations Before Locking In Your Rate

While a loan lock can offer peace of mind, it’s not always the right move for everyone. Here’s what to weigh up:

• Fees: Loan lock fees are typically non-refundable—even if rates don’t rise or you decide not to proceed.

• Expiry risk: If your settlement is delayed beyond the lock period, you could lose the locked rate and still be out of pocket for the fee.

• Market trends: If rates fall, you may miss out on a better deal and still have paid the fee.

• Lender differences: Not all lenders offer loan locks, and terms (including which loans qualify) can vary widely.

For example, in early 2025, CBA charges a 0.15% loan lock fee, while NAB and Westpac offer a flat fee. Some smaller lenders offer free locks as a promotional incentive, but only on select products.

How to Decide if a Loan Lock Is Right for You

Ask yourself these questions before proceeding:

• How likely are rates to rise before my loan settles?

• How much would a rate increase cost me over my fixed period?

• Is my settlement date likely to be delayed?

• Am I comfortable paying the fee if rates don’t change or fall?

For many Australians buying in a rising market or facing long settlement periods, the cost of a loan lock can be a smart hedge against surprise hikes. But if you’re confident rates will hold—or could even fall—it might be worth riding out the market.

Conclusion: Locking In Certainty in an Uncertain Year

With rate volatility expected to continue through 2025, loan locks are gaining traction as a practical tool for risk-averse borrowers. But like all financial products, it’s vital to crunch the numbers and weigh up both the costs and benefits. A loan lock won’t suit everyone, but for those needing certainty in a fast-moving market, it could be the difference between peace of mind and a nasty rate shock.