Mortgage Lock Volumes Were Up Last Month, But How Long Will It Last?

Mortgage lock volumes increased last month, but continued improvement depends on the economy moving into the spring buying season.

Mortgage Capital Trading reported a 27.9% increase in mortgage lock volume month-over-month in February, following a typical seasonal pattern after December and January.

MCT suggests that the trend looks good for the upcoming spring buying season, though other factors pose risks to the market.

One possibility is that the early part of spring will bring the most dedicated buyers, who will quickly scoop up homes, leading to demand flattening as summer closes in.

Tariffs and retaliatory trade measures are set to make borrowing more expensive, too, as rates react to the economy and new homes become more costly to build. Both the European Union and Canada have enacted new duties in response to President Donald Trump’s trade war.

Prolonged tariffs will put upward pressure on inflation as businesses offset duties by increasing prices. The Central Bank is likely to hold rates in response.

“The expectation is that the Federal Reserve will likely hold the line on rates in March and May, with markets anticipating a likely rate cut in June,” Andrew Rhodes, Senior Director and Head of Trading at MCT, commented.

“Economic performance given impending tariffs, Nonfarm Payroll, and the Consumer Price Index will continue to be the biggest factors influencing rate decisions as we move into the summer months.”

Inflation cooled for the first time in four months and by more than expected in February, but analysts don’t see much more improvement coming.