Mortgage Lock Volume Dips Slightly In Response To Rising Rates
Mortgage Capital Trading, Inc. (MCT), a mortgage hedge advisory and secondary marketing software firm, reported a slight 4.76% decline in mortgage lock volume over the prior month.
You can download the complete report HERE.
The slight dip in mortgage lock volume is likely attributed to an increase in mortgage rates through the last month. “The summer buying season may have provided a nice backstop to prevent lock volume from dropping further this month,” said Andrew Rhodes, Senior Director, Head of Trading at MCT. “If we continue into this restrictive territory through the winter buying season, we could see additional contraction through the rest of 2023.”
The Fed’s July decision to raise the Federal Funds Rate has contributed to a one-year high for mortgage rates. Friday’s Nonfarm payroll report also came in slightly higher than expected, while other indicators, like the unemployment rate, unexpectedly ticked up from 3.5% to 3.8%. This mixed bag of indicators may give the Fed enough ammo for additional rate hikes in 2023.
As we move into the mortgage industry’s natural winter slowdown, eyes will be on the Fed for communication that we’ve reached the terminal Federal Funds Rate. “Any indication from the Fed that we’ve reached the terminal rate will trigger a reprieve in rates,” said Mr. Rhodes. “In turn, market participants will begin to step back in and provide stability.”
MCT’s Lock Volume Indices present a snapshot of rate lock volume activity in the residential mortgage industry broken out by lock type (purchase, rate/term refinance, and cash out refinance) across a broad diversity of lenders (e.g., sizes, products/services offered, business models) from MCT’s national footprint.
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