I'm in the process of looking into refinancing my home.

Let's say I talk to lender A and lock a rate of 3%.

Two days later, rates fall. If I hadn't locked, then lender A would currently offer me 2.9%.

Will lender A ever consider lowering the locked rate? If not, I can just go to another lender (lender B) and get the lower rate so it seems that it would be in the interest of lender A to lower the rate.

  • You say "talk to", what does this mean exactly? Did you already sign a contract? Or did they just tell you what the rate will be if you sign it? Or something in between. If they say no, will you actually go to lender B? If you aren't prepared to say no to lender A, then you don't have any leverage.
    – user253751
    Feb 28 '20 at 14:36
  • @user253751, by "talk to" I mean I talked to someone on the phone and that is it. Yes, I will actually go to lender B.
    – gaefan
    Mar 3 '20 at 19:49
  • Well then you have nothing to lose by asking lender A for lender B's rate, and lender A has everything to lose by not saying yes.
    – user253751
    Mar 4 '20 at 13:00

The term you are looking for is "float down". The lock will set a cap, but will also give you a lower rate if the rates drop. Because this transfers some risk to the lender, they will charge a higher lock fee. There is no guarantee that in your case that rates will drop, so the extra feature might never get used.

Some lenders offer this feature, some don't. Ask for it if it is important to you.


I'll add another answer in addition to the excellent answer of @mhoran_psprep because it is too long for a comment.

I locked a rate with DCU over the phone, and they then sent me all the loan documents.

Rates are still falling so I called them up today. They said that during the loan process (even after I've signed the documents) up to 15 days before closing, they will allow a one-time request for a float down to a lower rate.

It seems that the lenders have to provide some accommodation for this since it easy to switch to a different lender when rates continue to fall.

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