What a mortgage rate hold actually is
A mortgage rate hold is an agreement between you and a lender to lock in a specific interest rate for a set period — usually between 60 and 120 days. You're not required to accept the rate, but you can choose to before the hold expires.
It's a way to protect yourself against rate swings while you're shopping for a home. Interest rates can change fast, and a rate hold helps ensure you get your best rate when you need it.
How long you can hold a rate (and what it costs)
Mortgage rate holds typically range from 60 to 120 days and are usually free of charge. You're also not obligated to use that specific lender once you've found your property.
One thing to know: the longer the rate hold period, the higher the interest rate may be. A shorter hold might give you a lower rate, but it also gives you less time to find a home.
What happens if rates drop after you lock in
If rates go down after you get a rate hold, we can negotiate a lower rate with that lender. Or we can review the marketplace and show you alternatives with a different lender that offers a better rate.
Here's the key: if rates go up after your hold, you're protected from the increase. But if they go down, you're able to take advantage of the lower rate.
What happens if your deal doesn't close in time
If you can't close on the property before the rate hold expires, you lose the hold. The lender will offer you a new rate hold based on current market conditions.
How the Bank of Canada's rate affects your hold
The Bank of Canada's interest rate can have a significant impact on mortgage rates, which in turn affects rate holds. If the Bank of Canada raises its rate, lenders may raise their mortgage rates as well — which could make it more expensive to secure a hold or get a mortgage.
If you have a rate hold and the Bank of Canada raises its rate before your hold expires, you may be able to keep your original rate if your lender honours the hold. But if your hold expires and you need to apply for a new one, you may need to do so at a higher rate.
It's worth keeping an eye on the Bank of Canada's rate if you're planning to get a hold or a mortgage. We can help you understand how changes in the rate may affect your situation and what you can do to protect yourself against increases.
The bottom line
Mortgage rate holds can be an excellent way to protect yourself against rate swings while you're shopping for a home. The key is staying in touch with your mortgage broker throughout the process so you understand the terms and conditions of the hold agreement. That way, you can make an informed decision about your mortgage and ensure you're getting the best possible rate for your situation.
Where rates are today
Reading about rates is one thing—seeing today's is another. See today's live mortgage rates, updated every morning from every lender we work with, along with our forecast on where fixed and variable are heading next and a live fixed-vs-variable breakdown. If you're closing in the next 120 days, that's also where you'll find the free rate hold.
