Mortgage rate-lock activity that expanded notably in February shows borrowers remain “highly rate sensitive” to commence the 2026 homebuying season, according to newly released data from Mortgage Capital Trading (MCT), a capital markets advisory firm.
Total lock volumes were more than 42% higher in February than a year ago, said MCT in a monthly market report published this week. Activity was boosted by more than 6% annual growth in purchase lock volumes, rate-and-term refinance locks that rose 438% and cash-out contracts that bumped up 50%.
Purchase locks rose 30% from January, as did rate-and-term refinance locks, while cash-out volumes rose about 12.7%. Purchase locks had fallen about 3% from December to January to land just 2% higher over the year, a slowdown from 7% yearly growth in December.
“The primary driver behind the increase in lock volume was the brief move into the high-5% range,” said Andrew Rhodes, MCT’s head of trading, in commentary accompanying the monthly figures, “which marked the first time in several years borrowers had seen mortgage rates with a ‘5’ handle.”
Loan hedging platform Optimal Blue also recently reported that purchase mortgage demand observed a healthy rebound in February, driven by easing mortgage rates.
A rate lock is an agreement between a borrower and a lender that the interest rate on a loan will remain fixed during the loan processing period. Lenders hedge these locked positions against fluctuations in market rates, which could spur fallout, until the loan is funded.
Average rates for 30-year fixed-rate mortgages have reset higher in early March since the Iran war started on Feb. 28, hurting affordability and threatening spring home sales. Nevertheless, purchase mortgage applications posted a 7.8% weekly rise for the week ending March 6, according to the Mortgage Bankers Association.
But MCT noted this week that a weaker labor market “has also added complexity to the economic outlook” ahead of the Federal Reserve’s two-day policy meeting next week, which will include updated projections from Fed officials on the trajectory of the U.S. economy.
The Labor Department reported last week that employers shed 92,000 jobs in February while trimming nearly 70,000 jobs from December and January totals. Persistent inflation that threatens to reaccelerate amid global energy shocks from the Iran war may newly restrict how much the U.S. central bank may be able to cut rates this year.
“While rates have since moved back into the low-6% range amid geopolitical uncertainty and inflation concerns,” added Rhodes, “we’re also seeing borrowers gradually adjust to the current rate environment as expectations normalize.”
