CBS News
Here’s how the Fed’s big rate cut affects mortgages
Getty Images
The mortgage rate landscape is undergoing a rapid transformation now that inflation is cooling. For starters, there has been a notable drop in mortgage rates over the past few weeks, with rates hitting a two-year low on Wednesday. This shift has already begun to stir excitement, as more affordable borrowing costs open doors for those previously priced out of homeownership.
The Federal Reserve also conducted its first rate cut since 2020 (September 18), reducing the federal funds rate by an unexpected 50 basis points. Most analysts expected the Fed rate cut to be just 25 basis points, making this decision larger and more impactful than anticipated.
This move is expected to put additional downward pressure on interest rates across the board, including mortgages, and may present an opportunity for borrowers to lock in more favorable rates. But how exactly will this substantial Fed rate cut impact mortgages? Below, we’ll break down what you should know.
See how low of a mortgage rate you could lock in here today.
Here’s how the Fed’s big rate cut affects mortgages
The Federal Reserve’s decision to implement a 50 basis point rate cut has injected a new layer of complexity into the mortgage market. While the impact of a standard 25 basis point reduction has likely been factored into current mortgage rates, which are sitting at an average of 6.15%, it’s unclear exactly how mortgage rates will respond to this larger rate cut.
One outcome could be that the larger rate cut will cause mortgage rates to fall even further in the coming days and weeks, building on the recent trend of declining rates. This could create a more favorable environment for borrowers, with the possibility of mortgage rates dipping to levels not seen in years.
However, it’s crucial to understand that the Federal Reserve’s actions, while significant, are not the sole factor influencing mortgage rates. The mortgage market is a complex ecosystem affected by various economic indicators. Long-term bonds, particularly the 10-year Treasury yield, also play a pivotal role in determining mortgage rates. So while the Fed’s rate cut will likely push these yields lower, other factors can also sway bond yields and, consequently, mortgage rates.
The mortgage industry itself may also play a role in tempering any dramatic rate drops. For example, lenders might be hesitant to lower rates too quickly or too far as they balance their desire to attract borrowers with the need to maintain profitability. This could result in a more gradual decline in mortgage rates rather than an immediate, sharp drop.
For potential homebuyers or those considering refinancing, the Fed’s larger-than-expected rate cut presents both opportunities and potential challenges. On one hand, the prospect of lower mortgage rates is certainly appealing. Lower rates translate to more affordable monthly payments and increased buying power, potentially allowing borrowers to qualify for larger loans or more desirable properties.
The allure of lower rates could also bring its own set of complications, however. If mortgage rates decline even further, it’s likely to attract more buyers to the market. This increased demand could lead to heightened competition for available properties, potentially driving up home prices and offsetting some of the benefits of lower interest rates.
Those waiting for rates to bottom out before making a move may also find themselves in a precarious position. Timing the market is notoriously difficult, and there’s a risk that rates could begin to rise again before you can act. After all, economic conditions can shift rapidly, which could reverse the current downward trend in rates.
Lenders are also more likely to see an uptick in inquiries and applications in the wake of the Fed’s decision. This increased volume could lead to longer processing times and potentially stricter underwriting standards, so borrowers should be prepared for this possibility and consider getting pre-approved or starting the application process early.
Find out how low your mortgage loan rate could be now.
The bottom line
The Federal Reserve’s unexpected 50 basis point rate cut will likely have a noticeable effect on the mortgage market, but its exact impact remains uncertain. While lower rates may materialize in the short term, a range of factors will influence how mortgage rates move in the future. So, homebuyers and homeowners who plan to refinance should carefully consider their options, recognizing that waiting for the perfect moment could be risky in an unpredictable market. Securing a favorable rate now may be the best course of action instead, especially with rates already at a two-year low.
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
Across the United States, the issue of women clergy is currently a focal point in several Christians denominations, including the Catholic Church, where women are not allowed to be ordained.
The CBS Mornings series, “The State of Spirituality with Lisa Ling,” explores unique paths to faith, spirituality and religion. The latest installment of the series focuses on women in Albany, New York, leading a grassroots rebel movement in support of women clergy.
Around 52 million Americans identify as Catholic. According to Pew Research, around 64% of U.S. Catholics support the idea of women priests, but for hundreds of years, only men have been allowed to become ordained clergy.
“I think they’re afraid of change,” Bridget Mary Meehan said.
Meehan and Mary Theresa Streck are both part of the Association of Roman Catholic Women Priests—a worldwide movement advocating for the ordination of women in the Catholic Church. The women part of this movement are ordaining themselves in direct defiance of the Vatican.
Inside a warehouse-looking building in upstate New York, the rebels who are part of this movement convene for Sunday mass, hoping to inspire change.
“Change begins by somebody doing it,” Streck said.
Streck, along with congregants, are part of the Upper Room. It is described as an inclusive Catholic Community, where all are welcome. Streck, a woman priest part of the movement, presides over Sunday mass.
“People are looking for what we’re offering,” she said. “And they want to see ordained women, celebrating mass.”
The day CBS News visited the Upper Room, the sermon was delivered by Meehan, a bishop within the movement.
“Mary Magdalen’s energy rises up in us and inspires us to create a renewed model of church,” she preached.
The Roman Catholic Church does not allow women to be ordained, arguing in part, that clergy should be unmarried men in the image of Jesus and his 12 disciples. The women who are part of this movement disagree and have formed a resistance.
The Albany Diocese, in a statement to CBS News, said: “The Roman Catholic Diocese of Albany is not affiliated with this group.” The Vatican did not respond to our requests for comment.
While other Christian denominations, like the Episcopal Church, do allow women clergy, these women say they have decided to remain Catholic, even if the church does not recognize them.
“It’s in my bones,” Streck said. “I am a Roman Catholic.”
A turning point for some
Like many organized religions in the 21st Century, Catholic Church membership is declining. Those who have left often say its because of the way the church has dealt with sexual abuse claims involving priests, as well as how the church has historically handled divorce, the LGBTQ+ community and women.
“I think the Catholic Church left me,” Upper Room parishioner Timothy Perry-Coon said, but added the women priests helped bring him back to Catholicism.
“We are the Catholic Church here, too,” he said.
For many who attend the Upper Room, 2010 marked a turning point with their Catholic faith, after the Vatican listed ordaining women as a grave offense— alongside pedophilia.
How the movement began and progressed
The Catholic women priest movement is traced back to 2002—when seven women were ordained on the Danube River in Germany. The Vatican excommunicated all known to be involved and said all those who come after are also considered excommunicated.
“Our response was we do not accept this excommunication,” Meehan said. “We’re leading the church we love into a renewed model of priestly ministry to respond to the needs of Catholics all over the world.”
Both Streck and Meehan are former nuns, raised devout and proud Catholics.
“By the time I was in third grade…I wanted to be a nun. I knew in third grade,” Streck said.
At just 17 years old, Mary Theresa says she was called to join The Sisters of St. Joseph. That was until 18 years later, when another call came—love.
“I met a young priest,” Streck explained. “I knew that I loved him dearly and he loved me dearly. So, we both resigned.”
But Streck said her faith never wavered, “I think it was stronger than ever.”
Streck and her husband, Jay, would get married within the public housing project where they ministered and continued to minister for many years, even after renouncing their vows. But after Jay died of cancer, Streck began to explore a new call: The priesthood. It’s a call she said she knows her husband would have supported.
She said in her first phone call about becoming a woman priest, Meehan told her if she pursued this, she would be excommunicated.
“And I said, ‘okay, well, that’s, that doesn’t mean anything really, because I will continue doing everything that I’m doing,'” Streck said she responded.
In 2013, hundreds attended as Meehan ordained Streck in Albany. It was a first in the area.
“And since 2013… we have 10 women who have been ordained,” Streck explained. “And I think people are saying, well, I’m not going to wait for the church to decide it’s okay.”
Around 300 women worldwide have now been ordained within the larger movement. Streck and Meehan both have doctorate degrees in ministry and have created a process and seminary curriculum for ordination. Yet, Streck and Meehan acknowledge they may never see women priests accepted in the Roman Catholic church.
“But that’s not a good reason not to do it,” Streck said.
Earlier this year, in a rare interview, the Pope addressed the issue of women clergy with CBS News’ Norah O’Donnell.
“For a little girl growing up Catholic today, will she ever have the opportunity to be a deacon and participate as a clergy member in the church?” O’Donnell asked him.
“No,” Pope Francis responded.
But Streck and Meehan said that won’t stop them. They hope they are laying the groundwork for future generations of women priests. If they were given the opportunity to speak with the Pope or those in the Vatican, both women said they would tell them they love the Catholic Church.
“Do not be afraid of us,” Streck said. “We have a lot to offer.”
Meehan added, “We spent our whole lives just creating a church where there’s more justice, more equality and that everyone is so welcome at the table of God’s love.”
Eye Opener: More deadly explosions of communication devices in Lebanon
Teamsters union doesn’t endorse a presidential candidate for the first time since 1996
New York women leading rebel movement in hopes of inspiring change in the Catholic Church
Eye Opener: More deadly explosions of communication devices in Lebanon
Teamsters union doesn’t endorse a presidential candidate for the first time since 1996