Banks have a vested interest for mortgage interest rates because they make a profit from the rates! Banks have overhead as any other business. The reduction of compliance costs will be passed onto the consumer.
Time to go back to Mortgage Lending 101. In todays world, you originate the loan and sell it. The interest rate is irrelevant and if NRST folks think it will bring interest rates down (which are actually based on demand for a commodity, money, which we are profligately printing and therefore driving down the value of and increasing the interest rate people want in order to hold instruments denominated in it) they are in fantasy land...
Inteest rates also presently have to add in an amount necesary to cover the effects of income tax and this raises the inerest rates.
Here is one discussion dealing with interest rates and what will happen to them under the FairTax (and there are others on their site also - I'd sugest you check some of them):
http://www.fairtax.org/pdfs/interestrates.pdf