Mortgage Rate Lock-in

In Canada, lenders often use “rate hold” and “rate lock” to describe the same thing: a temporary promise to hold your mortgage rate during the hold period.

A mortgage rate lock allows you to freeze a mortgage rate for a few months, usually up to 150 days. When you get a mortgage pre-approval from the lender may provide a conditional rate hold that states the rate, term, amortization, and estimated payment, subject to final approval and unchanged application details.

Most lenders offer rate holds of 30, 60, 90, or 120 days, but it is possible to find rate holds for up to 150 days. During the rate hold, the mortgage rate will stay unchanged. If mortgage rates go up during the lock-in period, you can benefit from a lower locked rate. If mortgage rates decrease, some lenders may adjust your locked-in rate downward once during the hold period; others will not lower it but will still offer you the prevailing lower rate (if rates decline) when you finalize your mortgage.

To get a mortgage rate lock-in, you need to ensure that you have the documentation needed for getting a mortgage. At the end of this process, you would get a confirmation of mortgage loan pre-approval. A lender issues this document and states how much money you can borrow, at what interest rate, with what term and for a certain amortization period. Last but not least, the pre-approval letter would state your monthly payment.

If your closing date falls outside your rate hold period, some lenders will extend it for a fee or a modest rate adjustment. Not all lenders offer extensions, so if your purchase timeline is uncertain, confirm the extension policy before committing to a lender.

Generally, if you do not have to pay anything for the mortgage rate lock-in, it is worth getting it. A mortgage rate lock-in allows you to get a mortgage faster and potentially at a better rate when buying a house. If a mortgage rate lock-in costs money, you should consider whether it is worth getting it.

A rate hold is similar to an option, a financial instrument. The factors determining the value of any option are the strike price, the expiration date, and the volatility of the underlying asset. If the mortgage rate decreases, the expiration date increases, or the expected volatility of the mortgage rates increases, the pre-approval becomes more valuable.

Volatility measures the typical deviation in the financial variable from its average value. Rate hold mortgage rate is more valuable today than at any time in the recent past due to higher volatility in the mortgage rates. Among the factors affecting the value of your rate hold, mortgage rate volatility is related to macroeconomic factors and is beyond your or your lender's control

Another important factor is the lock-in period length. Typically, lock-in periods for a fixed interest rate last between 13 and 19 weeks. Among the Big Six banks, BMO offers one of the longest standard rate holds at 130 days for new mortgages, while most other big banks cap their pre-approval holds at 120 days.

As of March 2026, the benchmark price of a Canadian home is around $660,000, while the average price of a home in Ontario, is $800,000. The table below presents a few typical mortgage situations to consider. In this table, a down payment of 20% is assumed.

The table above illustrates how the interest rate at the time you finalize your mortgage can significantly affect your total costs. For example, on an $800,000 purchase with 20% down, the difference in interest paid over five years between a 3.50% and a 4.50% rate is approximately $30k. Locking in a favourable rate during your pre-approval period — before rates potentially rise — can produce savings of this magnitude. A 5-year fixed-rate mortgage and 25-year amortization is assumed throughout.

For variable rate mortgages, the main value of getting a pre-approval is knowing how much you qualify to borrow and demonstrating that credibility to real estate agents and sellers, not the rate hold itself.

In a variable-rate mortgage, your interest rate is based on the lender's prime rate minus a negotiated discount. A pre-approval holds that discount for the hold period, but lenders often do not vary their spreads significantly, so this protection is of limited practical value.

The more meaningful rate-lock consideration applies to fixed-rate pre-approvals. After cutting its overnight rate to 2.25% through 2024–2025, the Bank of Canada has paused, and the forward market expects rates to rise modestly through 2026–2027. In this environment, locking in a fixed rate through a pre-approval provides real protection against potential rate increases during your home search — something a variable-rate hold does not.