Federal Reserve Chair Janet Yellen again addressed the question of the Fed and interest rates earlier this week. This go around Yellen suggested that an interest-rate hike was in the cards for later this year. We say “suggested,” because as usual Yellen made any rate hike conditional: When the economy can support a rate hike, in the Fed's opinion, then we will see a rate hike.

To be sure, a rate hike could be in the cards (though we remain skeptical), but it really doesn't matter. Interest rates have been rising with or without the Fed's imprimatur.

The yield on the very influential 10-year U.S. Treasury note seems intent on hanging above 2.35%. This, after it was hanging around 1.9% as recently as April. Mortgage rates, in turn, also seem intent on hanging around at a higher level. The 30-year fixed-rate loan continues to creep progressively higher. It's now comfortably above 4%. The 15-year fixed-rate loan has followed a similar trajectory. As the yield on the 10-year note goes, so goes longer-term mortgage rates.

The fact is that mortgages rates have moved higher without any prompting by the Fed. This point is worth underscoring. Many borrowers believe low mortgage rates will remain as long as the Fed continues to procrastinate on its first rate hike in nearly a decade. This is untrue. Interest rates in general and mortgage rates in particular can rise without any input from the Fed, as we've seen in recent months.

Nevertheless, many borrowers believe time is on their side. Until the Fed announces a rate hike, low rates are here to stay. That's a dangerous mindset, because there is nothing to stop credit markets from supplanting low interest rates with high interest rates. What's more, there is nothing to stop the market supplanting rates much quicker than most people expect.

Information provided by Jessica Regan.

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