Introduction to Rate Lock

The rate lock is an agreement between customer and bank that allows the customer to lock in the interest rate over a specific period. This will protect the customer from being exposed to the risk of interest fluctuations.

The rate lock applies to both the new and existing contracts. While the system applies rate lock automatically for new contracts (based on the rate lock agreement Id entered), the user needs to trigger the application of rate lock manually for existing contracts.

The system compares the rate locked, contract rate (for existing contracts), and prevailing market rate during the application of rate lock and applies the lowest rate among those.

The system resets the contract rate back to the prevailing rate once the rate lock is expired.