Locked-in Interest Rate Definition

An interest rate is considered to be "locked in" when it is not adjustable over a specified term. The constant interest rate is agreed upon by the lender and the borrower at the time the loan is made. A common example of a locked-in interest rate is a fixed rate mortgage where the interest rate remains constant for the e.g. thirty-year term of the mortgage. While locked-in interest rates are usually seen as being advantageous to the borrower, this is only the case if interest rates trend upwards during the life of the loan.