CNBC.com

So what's a half a percentage point or even three quarters of a point, when mortgage interest rates are still historically low? Well, apparently a lot.

I'm told that a lot of loan applications, and refis in particular, that are currently in the pipeline were submitted without a rate lock. Mark Hanson, of the Field Check Group says, "millions of refi applications presently in the pipeline, on which lenders already spent a considerable amount of time and money processing, will never fund."

He also points out that millions of borrowers already have 5.25 percent to 5.75 percent interest rates, thanks to all the refinancing done during the housing boom. The whole idea of the Obama administration's housing stimulus plan was to lower interest rates by buying up mortgage backed securities. Those low low rates would supposedly spur home buying as well as help troubled borrowers by refinancing them into lower rate loans. Oh well.

Hanson estimates that as much as 60 percent of loans in the system aren't locked. I asked why, and he cites several reasons:

a) turn times have been so long and it costs more to lock for 60-90 days

b) much cheaper rates at 12-21 day locks - about .25% better in rate from 60-90 days

c) everyone wanting 4.5% that is thought to be the prevailing rate. Loan officers say 'come on Ms Olick - do the application today. We will submit and get you all approved and then lock when 4.5% comes back.' Rates only came down to 4.5% and below for a few weeks in aggregate over the past several months, and it always happened suddenly. So loan officers take the application, turn it in to one or more lenders and wait for the spike downward to lock. It is a game that has been played for as long as I have been in the business. Rates have been creeping higher and that spike down has not come again so a massive amount of loans are unlocked.

d) mortgage brokers floating, hoping to make premium on the back side

e) rates have been consistently on the 'lower' side for months. The sense (moral hazard) is that the Fed had their back, so why not float the loan and wait for the lowest rates possible to come around.

In other words, the beat goes on.

Questions?  Comments?