CBS News
Here’s how much a $400,000 mortgage will cost after the Fed cuts rates
Getty Images
In today’s housing market, few factors hold as much sway over potential homebuyers as mortgage rates. After all, mortgage rates are significantly higher than they were just a few years ago when buyers were able to obtain mortgages with rates of 3% or lower. As a result, buying a home now can be a costly proposition, especially when you factor in that high home prices and limited for-sale inventory are also pushing up the cost.
But mortgage rates have fallen in recent weeks, and the first Federal Reserve rate cut of the year is looming. While the initial rate cut is expected to be just 25 basis points, even a slightly lower mortgage rate could result in big savings on the cost of a mortgage loan. There are likely more Fed rate cuts on the horizon, too, which could mean that mortgage rates could drop even lower over time.
In turn, many prospective buyers are wondering whether it makes sense to act now or wait for lower rates to pan out. That answer depends on factors like your budget and optimal timeline, but it can help to know what today’s costs are and what they could be after rates are cut. So, how much would the monthly mortgage payments be on a $400,000 loan at the current rates — and how much you could save if you waited for rates to drop?
Compare today’s top mortgage loan rates here to find the right option for you.
Here’s how much a $400,000 mortgage will cost after the Fed cuts rates
To understand the potential impact of rate cuts on a $400,000 mortgage, let’s first examine the current landscape. As of September 13, 2024, the average 30-year fixed mortgage rate stands at 6.41%, while the 15-year fixed rate is 5.78%.
Using these figures as our baseline, here’s what you can expect the monthly payments to be on a $400,000 mortgage, assuming a 20% down payment of $80,000:
- 30-year mortgage at 6.41%: $2,003.71 per month
- 15-year mortgage at 5.78%: $2,662.46 per month
These amounts represent principal and interest payments only. Homeowners should be aware that actual monthly costs will be higher when factoring in property taxes, homeowners insurance and private mortgage insurance (PMI) if the down payment is less than 20%.
Now, let’s explore how these payments might change if the Federal Reserve implements rate cuts:
Scenario 1: A 0.25% Fed rate cut
If the Fed cuts rates by 25 basis points at its upcoming meeting and mortgage rates follow suit, the new monthly payments on a $400,000 mortgage loan could look like this:
- 30-year mortgage at 6.16%: $1,951.60 per month
- 15-year mortgage at 5.53%: $2,619.76 per month
In this scenario, borrowers could save approximately $52 per month on a 30-year mortgage or about $43 per month on a 15-year mortgage.
Scenario 2: A collective 0.50% Fed rate cut
If the Fed implements multiple rate cuts totaling half a percentage point over the coming months, and mortgage rates drop by the same amount, the potential savings become more substantial:
- 30-year mortgage at 5.91%: $1,900.08 per month
- 15-year mortgage at 5.28%: $2,577.46 per month
With a half-point reduction in rates, borrowers could see monthly savings of about $104 on a 30-year mortgage or about $85 on a 15-year mortgage compared to the monthly cost at current rates.
Over the life of the loan, the monthly savings can add up significantly. For example, saving $104 per month on a 30-year mortgage would result in total savings of over $37,000 over the full term of the loan. This illustrates the potential long-term impact of even small changes in interest rates.
It’s important to note, though, that the calculations above assume mortgage rates will move in tandem with Fed rate cuts. In reality, the relationship between mortgage rates and the Fed rate is more complex, and other economic factors can also play a role.
Find out whether today’s best mortgage loans are the right fit for your budget.
Why you may want to lock in a mortgage rate now
While the prospect of lower mortgage rates is enticing, you might want to consider locking in a rate sooner rather than later. Here’s why:
- Market uncertainty: While rate cuts are expected, their timing and magnitude are not guaranteed. Not only are expected rate changes typically factored in before they occur, but economic conditions can change rapidly, potentially leading to unexpected rate increases.
- Home price trends: As rates decrease, demand for homes often increases, which can drive up property prices. In turn, the money saved on interest might be offset by having to pay a higher purchase price if you wait.
- Opportunity cost: Every month spent waiting for lower rates is a month of paying rent instead of building equity in a home. This lost opportunity for wealth accumulation should be factored into your decision.
- Competitive advantage: In a market with limited inventory, having a rate locked in can make your offer more attractive to sellers, potentially giving you an edge over other buyers.
- Historical context: While current rates may seem high compared to recent years, they are still relatively low from a historical perspective.
- Refinancing option: If rates do drop significantly in the future, you still have the option to refinance your mortgage, potentially benefiting from both current opportunities and future rate decreases.
The bottom line
While the upcoming Fed rate cuts could lead to savings on a $400,000 mortgage, the benefits must be weighed against the risks and opportunities of acting sooner. If a lower rate could mean the difference between affording a home and being priced out, it could make sense to wait for rates to fall before buying a home. But if you’re worried about the potential for more buyers to enter the market, driving home prices and competition up, you may want to lock in your rate now instead.
CBS News
U.S. Air Force gives update on new B-21 stealth bomber: “Nobody on the planet can do what we’re doing”
Air Force leaders gave an update on the B-21 Raider, a futuristic aircraft that is expected to become the United States’ next nuclear stealth bomber.
The aircraft can deliver both “conventional and nuclear munitions,” according to a news release from the Air Force, but will be “critical to deterring conflict” around the world. Gen. Thomas Bussiere, commander of the Air Force Global Strike Command, said the stealth bomber will help the United States keep pace with threats worldwide.
“We are the free world’s only bomber force. … Nobody on the planet can do what we’re doing right now,” Bussiere said, adding that there will likely be an increased demand for the support the stealth bomber can provide in the coming years.
Air Force Global Strike Command
Currently, the stealth bomber remains in the test flight stage, and is doing two such flights a week, according to Thomas Jones, the Northrop Grumman Aeronautics Systems sector president. A photo shared by the Air Force shows one of the bombers during flight testing.
“We’re really starting to strike up quite a cadence … when we started this journey, we made a vow that we were going to design this system to be a daily flyer,” Jones said, according to the release. “It’s been a phenomenal year of progress, and we hope to continue that through the next year.”
A recent notable test confirmed the stealth bomber’s structural design and integrity, according to officials. The plane is now going through a fatigue testing campaign.
Once the planes are tested, some of the aircraft will be delivered to the Ellsworth Air Force Base in South Dakota to help train Air Force squadrons on the stealth bomber. When the B-21 enters the service, this site will be the main operating base for the stealth bomber.
Whiteman Air Force Base in Missouri will be a secondary base, and Dyess Air Force Base in Texas a third.
The stealth bomber is set to replace the B-1 Lancer and B-2 Spirit bombers in the Air Force’s fleet.
Getty Images
Whether you’re barreling down a mountainside or taking a leisurely ride along your local trail, a great mountain bike is key. But what exactly does a great mountain bike look like, in terms of features? It depends on the kind of terrain and riding style you do.
The best mountain bike for long, cross-country rides will have very different specs than a downhill bike. Some offer full suspension for a smooth ride on bumpy trails. Some have wider tires that are better at gripping wet or sandy terrain. Some are designed for maximum pedaling efficiency and serious stopping power so you can climb steep mountainsides without wearing yourself out. No matter where you and your new bike are headed this fall, we’ve rounded up the best mountain bikes for every rider and every terrain in 2024. Don’t forget to strap on your bike helmet.
Best mountain bike for beginners: Giant Talon 29 1
Mike’s Bikes
The Giant Talon 29 1 is a solid entry-level mountain bike at a reasonable price point. With its balanced frame geometry and high-traction tires, it’s great for a comfortable, stable ride on most trails. While that means it’s not specialized for uphill climbs or cross-country speed, the balanced design is great for beginners or casual riders who aren’t planning to tackle those more challenging technical trails just yet.
With 80mm to 100mm of suspension travel, this hardtail mountain bike strikes that perfect balance of pedaling efficiency and shock absorption.
Riders can also adjust the suspension within that range by adjusting the air spring and the rebound damping. That gives you improved steering precision and a better ride feel since you can tailor it to your needs. If you’re a beginner, it may take some trial and error to fine-tune those settings, but playing around with them is a great way to learn how suspension impacts your ride.
Get this reliable entry-level mountain bike at Mike’s Bikes for $950.
Top features of the Giant Talon 29 1:
- Grippy tires offer great traction in any trail conditions.
- The balanced frame geometry makes this a comfortable bike for most riders.
- The adjustable suspension fork allows you to fine-tune this mountain bike for your needs.
Best trail bike: Santa Cruz Tallboy C R
Backcountry
A full-suspension mountain bike with 120mm and 130mm suspension travel on the rear and front, respectively, it doesn’t get cushier than the Santa Cruz Tallboy C R (at least, not at this price point). Built for cross-country or trail riding, this bike’s design allows you to glide through rocky terrain almost as if you were just cruising on a paved road. That suspension also helps cushion the impact on pops and short drops so you can build up speed while navigating the trail with confidence.
With that said, it can be a little sluggish on uphill climbs. But if you typically stick to more straightforward trails, you won’t have to deal with that issue. For those just-for-fun weekend trail rides, this is the mountain bike you want.
Get this comfortable, agile trail bike at Backcountry while it’s on sale for $3,849 (reduced from $4,799).
Top features of the Santa Cruz Tallboy C R:
- Boasting full suspension, this mountain bike is a comfy ride no matter how bumpy the terrain.
- The carbon C frame is both lightweight and stiff for better control and improved agility.
- The four-piston brakes offer excellent stopping power.
Best fat tire mountain bike: State 6061 Trail+
State Bicycle Co.
For wet or sandy trails, traction is everything, which means you need a fat tire bike like the State 6061 Trail+. With 4.5-inch wide tires that can handle running even at low PSI, this mountain bike can grip the trail no matter how loose or slippery.
Whether you want to cruise along sandy beaches or power through snowy mountain trails, the stability of this fat tire bike is the key to doing so safely and confidently. You won’t be building up much speed, but you’ll have a lot of fun plowing through trails that a standard trail bike couldn’t even touch.
Get this fat tire bike directly from State Bicycle Co. for $1,000.
Top features of the State 6061 Trail+:
- Thick 4.5-inch tires provide extra grip for wet or loose terrain like snow, sand and mud.
- With low PSI capabilities, you can lower the tire pressure to widen the surface area even further to maximize your grip on soft, slippery trails.
- The alloy frame is stiff and strong without adding any more bulk than necessary.
Best mountain bike under $500: Huffy Stone Mountain
Amazon
The Huffy Stone Mountain is a hardtail mountain bike that is lightweight and offers good traction for navigating trails. The budget-friendly bike is missing a lot of the features you’ll find on the more advanced mountain bikes listed above. However, if you’re just starting out and just want to get out on a trail to see if you like mountain biking, this is a good bike to start with.
While you can’t take it on any serious trails, it’s got the basics you need for easy local bike trails. Use it to get a feel for the sport and then upgrade to a mountain bike better suited to the kind of trails you want to tackle. Then, pass this Huffy Stone Mountain on to a friend or teen who’s curious about mountain biking.
A bestseller on Amazon, this budget mountain bike is available for as low as $200.
Top features of the Huffy Stone Mountain:
- This budget entry-level bike is great for casual rides on easy bike trails.
- A wide variety of frame and wheel sizes allows you to get the right fit for your height.
- The lightweight, high-traction design is just enough to let you get a feel for mountain biking before committing to a higher-priced mountain bike with more advanced features and customizability.
Shop more top-rated mountain bikes:
What type of mountain bike should a beginner get?
The best mountain bike for a beginner is a balanced, versatile one. Since you’re probably not tackling steep inclines and declines yet, opt for a trail bike that offers great traction, strong brakes and easy maneuverability along bumpy, muddy trails. That means grippy tires and responsive steering so you can confidently control your bike over tree roots, up hills and on descents.
If the trails you’re eager to go on are largely uphill, look for a bike that’s lightweight with a firmer pedaling platform. Those two features will improve climb efficiency so you’re not wearing yourself out on those uphill stretches.
Do I need a full-suspension mountain bike?
You don’t need a full-suspension mountain bike, but they are nice to have. Unlike hardtail mountain bikes, which only have suspension in the front, full-suspension mountain bikes have suspension in both the front and rear. That extra suspension helps absorb shock, cushioning the impact as you hop over bumps or navigate downhill jumps and drops.
That cushier feel can be nice even on milder trail rides, but they tend to be significantly more expensive and require more maintenance than a hardtail mountain bike. So it might not be worth the extra expense and care if you don’t usually do technical trails or downhill riding.
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.