Volatile rates make locking a must

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

One of the unpleasant features of the mortgage crisis has been heightened volatility in the prices faced by borrowers. For example, the wholesale rate on 30-year fixed-rate conforming mortgages rose from 5.23 percent on February 6 to 6.16 percent on February 26, dropped to 5.65 percent on March 3, rose to 6.23 percent March 6, dropped to 5.38 percent March 20, and rose to 5.812 percent April 2. These numbers are drawn from the wholesale price data shown daily on my Web site. Increased price volatility invariably means an influx of letters from borrowers on lock problems. The lock is a mutual agreement by the lender and the borrower that their transaction will be at a specified price. Looking ahead, both are protected -- the borrower against a rise in rate, and the lender against a decline. Broadly, my letters from borrowers fall into two groups. One group locked when the rate was high, and now that it is lower they ask any or all of the following questions: are they commi...