Definition of "Lock-in-clause"

James  Mazza
James Mazza PalmerHouse Properties

A clause inserted in a loan agreement by a lender guarantee a quoted interest rate on a loan for a specified period of time. The lock-in-clause is an incentive for the borrower to close the loan before the expiration date. In relatively stable economic periods characterized by a low rate of inflation, lock-in-clause can be made for longer periods of time than during inflationary periods where there can be rapid changes in interest rates.

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