This is really quite extraordinary.

We have strong job growth, accelerating economic growth, the Federal Reserve withdrawing from the Treasury debt and mortgage-backed security markets, and yet mortgage rates continue to fall.'s latest survey shows that the national average on the 30-year fixed-rate mortgage is as low as it has been in the past year. Freddie Mac's survey shows the 30-year loan at a similar low.

We have to confess that we've been wrong on the direction of interest rates this year. But we've been right on the variables that should have lead to higher interest rates: more job growth, more economic growth, less Federal Reserve support. When these variables are factored in, interest rates are supposed to trend higher. Turmoil in Russia and Ukraine could be serving as a counterweight, but these events alone shouldn't keep rates in check.

Low consumer-price inflation – here and in most of the developed world – is likely the overriding variable. Here in the States, we have the potential for an inflation surge, but most of the developed world doesn't. Economies are so intertwined these days that low inflation and low growth in less robust economies could very well be holding inflation in check in the United States.

As for how low mortgage rates can go? We didn't think we had snowballs chance in summer of discussing 4% on the 30-year loan deep into August. But now sub-4% on the 30-year loan is entirely plausible.

Information provided by Jessica Regan.

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