Why do some lenders fail to honor rate locks?

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"Why have lock failures increased recently? A lock failure occurs when a lender refuses to honor a mortgage price that a borrower had believed was guaranteed. Lock failures occur when interest rates are rising and honoring locks is costly to lenders. The bulge in lock failures in recent months reflects an increase in interest rate volatility, relative to prior years. When market interest rates are stable or declining, locks are always honored because it doesn't cost lenders anything to do so. If a lock expires because the loan could not be fully processed within the lock period, the lender will extend it. In a rising rate market, however, expired locks will be extended only at the new market rate. But saying that mortgage lock failures result from rising interest rates is like saying that the failure of a casualty insurance company to pay off on a fire was a result of the fire. Mortgage locks are supposed to protect borrowers against rising interest rates. The fact that the prote...