How our rate locks work

What is a rate lock?

A rate lock is a feature you can implement on fixed rate home loans (residential or investment). It guarantees, or ‘freezes’, interest rates at a point in time. For example, if you lock your rate at 2.50%, but the bank raises rates to 2.70% during settlement, you still pay 2.50% for your fixed term.  

You’ll pay a non-refundable fee for utilising the rate lock feature, but you’ll secure your chosen rate between the time we receive your completed rate form and your loan funding date.

Why take out a rate lock?

Fixed rates can change all the way up to loan settlement. So, if you are concerned that your perfectly composed budget may be thrown out of wack by a rise in rates before settlement, you may want the option of paying a little bit now to (potentially) save on interest in the long term.

How does the rate lock work?

When you’ve locked in an interest rate on your fixed rate home loan (residential or investment), the interest rate is locked from when we receive a completed rate lock form and will end 90 days after the request is processed. 

This means that settlement needs to occur within 90 days, or else you will need to consider (a) extending the rate lock or (b) reverting to the reference rate.

When can you rate lock?

A rate lock can be applied to new fixed rate home loan applications anytime before settlement. A rate lock cannot be applied to certain variable home loan applications, switching, splitting, top-ups or repayment changes.

How to request a rate lock

1. Confirm your application is eligible for rate lock (e.g. you’re taking out a fixed rate loan).
2. Sign and return a rate lock form to one of our branch team members. We’ll lock in the applicable reference rate on the day we receive this form. 
3. Once your home loan account is set up (i.e. at settlement), you will be charged the applicable rate lock fee.

What rate is locked in?

Woolworths Team Bank lock in the reference rate applicable on the day we receive your rate lock form.

When does the rate lock expire?

Your rate lock will expire after 90 days. If your rate lock expires on a non-business day, the date will be extended to the next business day. You’ll need to sign and return another rate lock form

Are there any downsides to taking out a rate lock?

Like any banking product, a rate lock is appropriate for some customers and not for others. For one, a rate lock fee is not refundable, so you need to have the money put aside for it.

Also, if rates drop, you don’t automatically receive the lower rate – after all, you did lock it in. However, you can break the rate lock and revert to new rates available on the funding date. Just make sure you run the numbers to ensure you’ll save more from breaking the rate lock, as opposed to what you’d pay in interest over the long term, as your original rate lock fee will not be refunded.

Finally, you’ll be charged a second-rate lock fee if you select a different product (e.g. you change from one year fixed to three year fixed) and want to rate lock the new fixed term interest rate.

As always, consider if this product is right for you before applying.

What happens if your rate lock expires?

You have two options prior to your loan expiring: roll it over to a new rate lock, or let it lapse and pay the reference rate for the loan after settlement.

You can request to extend your rate lock for another 90 days if you wish to lock in the same reference rate again. You may do this because you need to extend settlement for additional inspections, or commitments with another property. All you need to do is request this extension before your current rate lock expires. In doing so, you’ll need to pay an additional rate lock fee.

If your rate lock has expired and you take no action, then the reference rate on the day of loan settlement will apply. You can also request a new rate lock for the current reference rate, although you will be charged another fee to do so.

What is your rate lock fee?

The Woolworths Team Bank rate lock fee differs depending on how much you intend to borrow:

• For loan amounts up to $1 million, the fee is capped at $500.
• For loan amounts more than $1 million, the fee is capped at $750.

The fee is debited to your home loan as soon as it is set up, but we will only charge you this at settlement. These details will appear on your statement.

Have any questions for us? Speak to one of our helpful branch team members for more information.