Ashley Underwood is taking advantage of the unexpected drop in mortgage rates by rushing to buy her first home before they go up again.

“I’m ready to cancel plans at a moment’s notice to go look at a house,” said Underwood, 27, who lives in Indianapolis, Indiana. “I didn’t expect to see rates falling again, and I want to lock in something before I lose out.”

The drop in the last month proved forecasters wrong, said Douglas Duncan, chief economist of Fannie Mae in Washington. After the Federal Reserve announced in December that it would begin tapering purchases of mortgage-backed securities, all the major housing forecasters said rates would jump this quarter. Economists didn’t foresee that investors would react to the Fed’s retreat by moving money from emerging markets into U.S. Treasuries, driving down home-loan rates.

“I was surprised by what happened in the bond market,” Duncan said. “Everyone was surprised. It was completely unexpected that mortgage rates would fall after the Fed began tapering.”

The average rate for a 30-year fixed mortgage in the U.S. fell to 4.23 percent last week, an almost three-month low. That’s 0.3 percentage point below the rate at the start of 2014.

The drop in borrowing costs means some buyers will purchase a home sooner than they had planned.

“People are getting a second chance, and that is bound to give a boost to the housing market,” said Sam Khater, deputy chief economist at CoreLogic Inc., an Irvine, California-based mortgage data and software firm. “It’s not a game changer unless the emerging markets situation worsens and rates get even cheaper.”

Second Chance

Government-owned mortgage companies Fannie Mae and Freddie Mac, the Mortgage Bankers Association and the National Association of Realtors all forecast in January that rates would increase by at least 0.3 percentage point in the first quarter. Instead, yields on 10-year Treasuries, which are used as a benchmark for mortgage rates, shrank as investors drove up bond prices.

“The sell-off in emerging markets wasn’t expected because it was hard to measure how much they’ve relied on the Fed’s monetary policy,” said Christopher Sebald, chief investment officer for Advantus Capital Management in St. Paul, Minnesota, which oversees $28 billion of assets, including about $4.5 billion in mortgage bonds.