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.
CBS News
North Carolina governor’s race rocked by CNN report on Mark Robinson’s alleged incendiary comments
Editor’s note: This story contains highly offensive language.
Washington — North Carolina Lt. Gov. Mark Robinson, the Republican nominee for governor, posted a slew of incendiary, explicit and racist comments on a pornographic website more than a decade ago, according to a CNN investigation released Thursday that has shaken the state’s gubernatorial race.
The report focused on comments made by an account with the name “minisoldr” on a pornographic website called Nude Africa between 2008 and 2012. The account used the name “mark robinson” in its profile and a number of biographical details posted by the account line up with Robinson’s own history, according to CNN. The network reported that Robinson appeared to use the account name on other platforms over the years, including YouTube and Pinterest, and that the email address associated with the account belonged to Robinson.
On the Nude Africa forum, the user expressed a desire to “bring [slavery] back” and “buy a few” slaves, while identifying himself as a “black NAZI,” according to CNN.
“Slavery is not bad. Some people need to be slaves. I wish they would bring it (slavery) back. I would certainly buy a few,” the account wrote in a discussion about Black Republicans in 2010, according to CNN.
“I like watching tranny on girl porn!” the minisoldr account also posted on Nude Africa, according to CNN. “That’s f****** hot! It takes the man out while leaving the man in! And yeah I’m a ‘perv’ too!”
In March 2012, minisoldr posted a preference for Hitler over former President Barack Obama’s administration: “I’d take Hitler over any of the s*** that’s in Washington right now!”
Minisoldr also used racist language to vilify civil rights hero Martin Luther King Jr.
“I’m not in the KKK. They don’t let blacks join. If I was in the KKK I would have called him Martin Lucifer Koon!” the account posted in October 2011, according to CNN.
Reports emerged earlier Thursday that CNN was planning to publish a damaging story that could lead other Republicans to call on Robinson to drop out of the race. In a video posted to X before the CNN story was published, Robinson flatly denied that he said anything in the CNN report and insisted he won’t drop out. North Carolina will begin mailing ballots to members of the military and voters outside the U.S. on Friday.
“The things that you will see in that story, those are not the words of Mark Robinson,” Robinson said in his video. “You know my words, you know my character and you know that I have been completely transparent in this race and before.”
Jason Armond / Los Angeles Times via Getty Images
Robinson echoed those comments in an interview with CNN. “This is not us. These are not our words. And this is not anything that is characteristic of me,” Robinson said, adding that he wouldn’t “get into the minutia of how somebody manufactured this, these salacious tabloid lies” when presented with evidence that the account belonged to him.
Robinson, who is 56 and married with two children, has a history of inflammatory remarks that have widely circulated since he won the state’s Republican primary in March. Serving as North Carolina’s lieutenant governor since 2021, he gained prominence in Republican circles after he delivered a pro-gun rights speech that went viral and kickstarted his political career. He’s made inflammatory comments across a number of topics — from Islam to abortion to feminism — but he’s been especially vocal on LGBTQ+ issues.
If elected, Robinson would become the first Black governor of North Carolina. Former President Donald Trump, who endorsed Robinson for governor, has referred to him as “Martin Luther King on steroids.”
The lieutenant governor blamed the CNN report on his Democratic opponent, North Carolina Attorney General Josh Stein.
“You all have seen the half truths and outright lies of Josh Stein,” Robinson said, claiming that Stein leaked the story to CNN.
The report’s release has spurred concern among Republicans about their nominee’s prospects in the coming election. Sen. Ted Budd, a North Carolina Republican, told reporters ahead of its release on Thursday that “North Carolinian voters are smart, and they know how to pick each and every candidate based on their own merits.”
When asked whether Robinson should step down, Budd said he didn’t have enough information.
“They’ve been assaulting him for years,” Budd said before the article was published. “We’re going to gather our facts through the weekend.”
contributed to this report.
Certain boxes of waffles sold at Costco Wholesale stores in the Midwest are being recalled because they may contain plastic, according to a notice by supplier Kodiak Cakes.
The recall involves Kodiak Power Waffles Buttermilk & Vanilla 40 count with the UPC code 705599019203 and a use-by date of Jan. 10, 2026, and only impacts products with the lot code 24193-WL4 and a time stamp of 12:00-23:00, according to the Park City, Utah-based company.
The recalled products were sold at Costco warehouses in 13 states: Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin.
The action was initiated “due to the potential presence of soft plastic film,” according to Kodiak, which noted that no injuries or illnesses had been reported.
Those who purchased the recalled product can return it to their local Costco for a refund.
People with questions can email Kodiak at: flapjacks@kodiakcakes.com or call 801-328-4067. Messages will be returned between 8 a.m. and 5 p.m. Mountain time, Monday through Friday.