Mortgage Lock Volumes Jumped 7% Last Month

Mortgage rate lock volumes jumped nearly 7% in May despite rates moving very little.

Mortgage Capital Trading’s (MCT) latest report revealed that mortgage lock volume increased 6.78% month-over-month in May.

Rates have been the primary influence on mortgage activity this year. MCT says the industry is monitoring economic data to see what decisions the Federal Reserve will make in the future.

“The next couple of months will be key from a data standpoint as the Federal Reserve looks for a trend of inflation heading towards the goal of two percent. Considering the Nonfarm Payroll number that just came out, setting a trend is going to take more time,” said Andrew Rhodes, Senior Director and Head of Trading at MCT.

“We’re looking ahead to the May CPI print to see how the Fed is going to interpret both data points. Even with CPI coming in around expectation, the jobs number could likely push the Fed to further delay their rate cuts.”

Nonfarm payrolls added 272,000 jobs in May, far above analysts’ expectations. Wages were up 4.1%, a tough data point for the Federal Open Markets Committee (FOMC), which meets this week.

Inventory has been trending up, however, prompting some buyers to pull the trigger despite high rates. The number of active listings was up 35.2% YOY last month. Newly listed properties also saw a spike.

Doug Duncan, chief economist of Fannie Mae, recently reminded homebuyers that rates aren’t historically high, and suggested getting used to their current levels.

“[A] 6% mortgage rate is not unusual historically,” Duncan told Marketwatch. “It’s just that people saw these 3% mortgage rates and got spoiled. But that’s a historical anomaly… Unless there’s some catastrophic economic event for the broader economy, we wouldn’t expect to see mortgage rates back at 3% in our lifetimes.”

He noted that the 30-year fixed rate averaged roughly 6% between 1950 and 2000.