Mortgage rates have have plunged to the lowest level in three years in recent weeks as the Federal Reserve has begun to fear that Brexit might become a reality. The latest data from housing giant Freddie Mac shows the average interest rate on a 30-year conventional loan at 3.54 percent, compared with more than 4 percent a year ago. The Mortgage Bankers Association reported loan applications have increased 17 percent from the first quarter, while refinancing is up 10 percent.

This is not what most economists expected to happen this year. That’s because mortgage rates are closely tied to the yield on 10-year U.S. government bonds. Those, in turn, have historically been influenced by the Fed’s benchmark overnight lending rate.

In December, the Fed raised its interest rate for the first time since the recession and signaled it planned to four more hikes this year. The anticipation of higher rates from the Fed pushed up 10-year Treasury yields, and mortgage rates followed.

But the Fed has not hiked rates again. It was forced to reevaluate its plans to amid weakness in the global economy. Just last week, Fed officials voted to remain on hold, and they cited the risks surrounding Brexit as an important factor. Consequently, yields on 10-year Treasury notes fell to levels not seen since 2012.