A Rate Lock is an agreement between a borrower and a lender to fix an interest rate for a specific period, protecting the borrower from future rate changes.
A Rate Lock is commonly used in home loans and mortgages, where interest rates may fluctuate before loan disbursement. By locking the rate, the borrower ensures they get the agreed interest rate regardless of market changes during the lock period.
Banks and lenders operate under guidelines from the Reserve Bank of India.
"A borrower locks a home loan interest rate at 8% for 60 days. Even if rates rise to 8.5%, they still get 8%."