Interest rates have been manipulated by the Fed for 'far too long' says ex-Wells Fargo CEO

  • Former Wells Fargo CEO Richard Kovacevich says abnormally low interest rates affect the number of people refinancing.
  • When the Fed manipulates rates and then they "go back to normal... you could burst the bubble," he says.

Former Wells Fargo CEO Richard Kovacevich said the Federal Reserve has manipulated interest rates for too long.

"I'm surprised interest rates haven't risen more," Kovacevich told CNBC's "Power Lunch" on Wednesday. They've "been manipulated by the Fed for far too long."

In a robust economy and historically low interest rates many people are anticipating an interest rate hike in 2018. Kovacevich said abnormally low interest rates do impact the number of people refinancing loans.

He pointed out that while people are more willing to take on new loans with lower interest rates, when mortgage rates that are lower than they should be, mortgage prices are higher. U.S. home prices rose 6.2 percent annually, according to Tuesday's S&P CoreLogic Case-Shiller Home Price Index.

"The risk is when you manipulate the rates and all of the sudden they go back to normal the way they should be," Kovacevich said. "You could burst the bubble. I don't think we have a big bubble here, but you certainly have elevated asset prices because of manipulation of the interest rates."