A Queueing Model for Evaluating Lock vs. No-Lock Mortgage Plans

Mortgage prices are determined according to two major alternative plans: One is the Lock Plan (LP) in which the price is determined at time of application, and the other is the No-Lock Plan (NLP) in which the price is determined when the application process ends and mortgage commitment is issued. It is widely believed that the difference between the plans is only due to risk shifting between borrowers and lenders.