Don’t panic

The Federal Reserve has lifted its benchmark interest rate four times in the past 18 months. What has that meant for mortgages and auto loans?

So far, nothing. In fact, borrowing rates for home and auto loans are almost exactly where they were when the Fed began. That trend suggests potential home and car buyers needn’t be panicked at the prospect of future hikes. Fed policymakers expect another one this year and three in 2018.

In December 2015, before the Fed’s first increase, 30-year mortgage rates averaged 4.06 percent, according to Bankrate.com. Now, they average just 4.05 percent. Five-year auto loans have barely risen: From 4.33 percent to 4.44 percent.

Why so little impact? Mortgage rates track the yield on the 10-year Treasury note. That has been kept in check by strong demand from overseas and low inflation expectations. Auto dealers, meanwhile, are keeping rates low for competitive reasons. Rates on credit cards and home equity lines of credit have risen, which could dampen spending. And adjustable-rate mortgages are also higher. Those rates don’t follow the 10-year Treasury.