The Fed has continued to insist that they will begin raising interest rates in the near future, as early as this spring. However, 30-year fixed mortgage rates currently are at a six month low and seem to be headed lower. The fact that lenders are willing to lock in rates this low makes it seem like mortgage lenders and other players in the market do not think that the Fed will follow through in their pledge to raise interest rates.
Since the last time that the Fed decided to tighten its monetary policy (2004), the U.S. federal debt has more than doubled, from $7.8 trillion to an approximate $18 trillion. This is likely the reason behind why the market is skeptical of the Fed’s publicly declared intention to raise interest rates, despite recent trends in the Fed’s truthful transparency. The federal government, in 2014, paid $431 billion in interest expenses on debt. If interest rates rose to historical averages, this expense could be larger than $900 billion. (Just imagine the political implications if this occurred).
While the Fed is independent of the federal government, it has not exactly helped the out-of-control government spending. Through quantitative easing (QE), the Fed is buying trillions of dollars in government bonds, but the interest paid on these transactions is returned to the Treasury as profit at the end of the year. In other words, the Fed is helping the government by allowing them to borrow (hundreds of) billions of dollars interest free which benefits the yearly deficit and debt.
In conclusion, it is unlikely to see interest rates rise very significantly, much less, anywhere close to historical averages due to the large effect that the increased rates would play on the national debt going forward.