Definition - What does Rate Lock mean?
A rate lock is an agreement that is in place between a lender and a debtor that allows for the debtor to avail of the same set rate of interest throughout a prolonged period of time. This would be instead of a variable rate, which would see the rate the debtor paid linked to the lending rate at a set amount and could potentially end up costing the borrower much more than they expected. A rate cap allows for predetermined payment amounts to be agreed and adhered to.
Justipedia explains Rate Lock
A rate lock is considered beneficial by many and by debtors who cannot afford the full repayment amount this is considered a necessity. It is understood that if the debtor cannot repay an amount linked to the lesser possible rate any additional rate hike would mean the debtor may not be able to meet expected repayments.