Here’s something you don’t see that often. Interest rates have fallen without any steps taken by the Federal Reserve Bank.

It seems like the Fed is doing a 180. Since the 2016 presidential election, the Fed has raised its key lending rate to banks nine times in quarter-percent increments. In 2018, the Fed raised rates four times. When it last raised rates back in December, managers said they would most likely raise rates twice this year.

But after the May Fed meeting, the chairman said that he thinks the U.S. economy will continue to grow above the Fed targets without any threat of inflation. Those comments had many on Wall Street thinking that the Fed might actually lower interest rates in the near future.

That is quite a reversal from the four interest-rate hikes in 2018 with a hint it may raise rates twice in 2019. But at the March meeting the Fed changed course and said it didn’t see a need to raise rates at all this year. Then in May, there was a hint of possibly lowering rates sometime this year. That excited market leaders and rates nose-dived.

International and domestic issues can also move interest rates. There’s continued worry that the China-U.S. trade deal looks shaky, England can’t pass Brexit, and now there is a new potential tariff on Mexico. All of that contributed to the downward pressure on rates recently.

Some rates move in tandem with the Fed’s discount rate, like home equity lines of credit, car loans and credit cards. Mortgage rates seem to follow the U.S. 10-year Treasury bond. Even though most mortgages are 30 years in duration, most people don’t seem to hold them that long because of moving and refinances. So, the 10-year bond has become the benchmark for mortgages.

Look at how much interest rates have fallen so far this year. Rates today are the lowest they been in around the last 20 months.  

This is great news for homeowners wishing to refinance their home and for buyers, as mortgage rates today are also at their lowest recent levels. 

This chart shows both mortgage rates and yields on the 10-year Treasury bond since 2007. Keep in mind that the Fed could just as easily change its mind again depending on growth and inflation rates this year. After all, a few months ago it had a different outlook on the economy than it does now. So, if you’re thinking of doing something, my advice is act now while rates are low. 

Steve Hyman is the broker and owner of Century 21 Sunset Properties. He can be reached at 726-6346 or

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