Mortgage rates were forecasted to reach 5% by the end of 2014, yet now in 2015, they are still well below 4%, a downward trend that has been going on for the last year and a half.

Freddie Mac’s latest primary mortgage market survey posted that the 30-year, fixed-rate mortgage averaged 3.69%, down from 4.28% a year ago, while the 15-year, FRM came in at 2.99%, down from 3.33% a year ago.

The Urban Institute (their thoughts below in italics) posted an article in order to decipher what major forces are keeping mortgage rates down.   

The institute discovered five forces that fall into two broad categories: forces that affect the interest rate on Treasury securities and those that affect the mortgage risk premium above the Treasury rate.

1. Slow growth and turmoil abroad

The United States looks like a much safer place to put money, driving down rates on Treasury debt that in turn drive down mortgage interest rates.

However, low rates are still fluctuating due to changing international headlines.  

"Strong U.S. economic data pushed mortgage rates up last week, overcoming any potential headwinds from continued turmoil in Europe that would've pushed rates down," said Erin Lantz, vice president of mortgages at Zillow (Z), about its latest mortgage report on Feb. 10.

"We expect rates will move slightly higher this week as international headlines should again dominate market movements in this data-sparse week."

2. Upheaval in the oil market

The rapid drop in oil prices is generally good news for American consumers (if less positive for American oil producers), but it also signals a degree of uncertainty in the commodity markets. 

Oil is pushing its way down to below $47.50 per barrel as of Jan. 12, and there’s no sign it’s going to change anytime.

Some worry the recent plunge in oil prices could cause home prices to slip in the oil-producing markets of Texas, Oklahoma, Louisiana, and elsewhere, writes Jed Kolko, the chief economist for Trulia (TRLA).

“But it typically takes two years for oil prices to fully affect home prices in those markets,” Kolko writes. “At the same time, lower oil prices could boost home values in the Northeast and Midwest.”

3. The U.S. economy is steadily improving

While eventually this recovery will result in higher interest rates, for now, the uncertainty premium that is normally reflected in higher interest rates for longer term debt is small, and reduced from a year ago.

“Mortgage rates broke out this week after an extended period of calm, boosted by positive economic data and a surprisingly strong monthly employment report. Job growth, in particular, has surged significantly in recent months, enough to bring forward expectations of a Federal Reserve interest rate hike to as early as the June 2015 meeting,” analysts with Bankrate said about the latest mortgage rate data.

According to the most recent jobs report from the U.S. Bureau of Labor Statistics on Feb. 6, total nonfarm payroll employment beat all expectations on the Street, rising by an unbelievable 257,000 in January, and the unemployment rate -- which remains controversial in how it is calculated -- was little changed at 5.7%.

4. Low Treasury rates, low mortgage rates

Yields on 10-year Treasury securities are typically used to set mortgage rates. Ten-year Treasuries currently yield 1.88 percent, well below historical levels. 

“The strength of the U.S. economy, at least for this week, was enough to overshadow the concerns about slower growth in both developed and emerging markets around the globe. The prospects for higher rates sapped some of the demand for bonds, with both government bond yields and mortgage rates moving higher in response. Mortgage rates are closely related to yields on long-term government bonds,” Bankrate added.

5. Reduced demand for mortgages

While mortgage demand may be down for reasons other than requirements for better credit, if the mix of originated mortgages is less risky than it was in the pre-bubble years, the mortgage risk premium can be expected to be lower. Generally increasing housing values should also reduce the risk premium.

Fannie Mae’s fourth quarter 2014 Mortgage Lender Sentiment Survey found that fewer mortgage lenders are reporting tighter credit, but weak consumer demand is increasingly cited as driving lenders’ decreased profit margin outlook.

Conducted in November 2014, the survey shows that for GSE-eligible loans, the share of lenders who say they have tightened their credit standards during the prior three months has gradually trended down this year, decreasing to 13% in the fourth quarter compared to 28% in the first quarter.