Home lenders say the number of borrowers backing out of rate-lock commitments has declined.

In fact, some lenders say the rate of fallout is too low and locks them into lower-than-market rates.

During the refinance boom, as many as half the home loans in lender pipelines did not close at the rate at which they were initially locked in. That was because as rates declined, borrowers would not close on their loans, instead seeking lower rates.

Today, with rates on the rise, borrowers are sticking with their locked-in rates. "Right now there is minimal fallout," said Kim Thoresen, a vice president at NBD Mortgage Co., Troy, Mich.

Ms. Thoresen said NBD's fallout ratio is less than 5%. A year ago, it was 7% to 10%, she said.

First Federal Bank has also had little fallout since rates began rising earlier this year.

The Lakewood, Colo., thrift measures its fallout as the ratio of broken rate locks and loans that were turned down to closed loans.

Its ratio of denied loans to closed loans is only 6% so far this year, said Malcolm E. Collier Jr., chief executive officer. It was 7.3% in 1993.

Only 2% to 3% of its locked-in loans do not close, he said.

Karl J. Mendenhall, senior vice president, First Union Mortgage Corp., said the Charlotte, N.C., lender's fallout was "fairly stable." But he said nearly 30% of its locked-in loans today do not close.

Mr. Mendenhall said First Union's fallout ratios fell to between 10% and 15% last March and April. Too low, by his standard.

He said most of First Union's fallout today comes from borrowers whose applications are rejected.

He expects fallout ratios to remain constant over the next few months.

Western, Financial Savings Bank, Irvine, Calif, has similar fallout ratios to First Union's.

George A. Martinet, a vice president, said that in wholesale lending, 30% to 35% of Western's locked-in loans don't get closed. In retail, the ratio is closer to 20%, he said.

But a year ago that figure was closer to 60%.

"It is simply because you are dealing with more purchase applications," he said. "When people find their house, they are doing what they can to close within the lock-in period."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.