Third straight cut stoked political pressure and questions over mortgage rate relief
The Federal Reserve’s third consecutive quarter‑point cut to its benchmark rate landed in a fragile mortgage market that has already priced in easier policy and is bracing for deeper political interference.
The move lowered the federal funds rate to about 3.6%, its lowest level in nearly three years, and came as housing professionals weigh how much further borrowing costs could realistically fall.
Instead of welcoming cheaper money, president Donald Trump sharpened his attacks on Federal Reserve chair Jerome Powell and signaled that his next choice to lead the central bank would push harder for aggressive easing.
Trump called the latest move “rather small” and said the cut “could have been doubled, at least doubled.”
He added: “I’m looking for somebody that will be honest with interest rates. Our rate should be much lower.”
Treasury secretary Scott Bessent signaled momentum in the search for the next Federal Reserve chair, saying there is "a very good chance that the president will make an announcement before Christmas."https://t.co/ialAFOXZNJ
— Mortgage Professional America Magazine (@MPAMagazineUS) November 27, 2025
Political heat on Powell intensified
Fed officials themselves have been deeply divided on the decision, with three dissenting votes – the most in six years – and internal projections pointing to only one additional cut next year.
Powell acknowledged the knife‑edge backdrop, saying risks to inflation were “tilted to the upside, and risks to employment to the downside – a challenging situation,” and that there was “no risk‑free path for policy as we navigate this tension between our employment and inflation goals.”
Trump’s allies, by contrast, framed the moment as an opening for a more dovish chair.
National Economic Council director Kevin Hassett, viewed in markets as a leading contender, said the Fed has “plenty of room to cut rates” and would likely need to do more in the coming months.
Mortgage rate impact remains uncertain
For mortgage lenders and originators, the question was not the 25‑basis‑point move itself but what comes next.
Ten-year US Treasury yields – a key driver of 30-year fixed mortgage rates – saw only marginal movement after the decision was revealed, hovering around 4.14% compared with a high of 4.20% on Wednesday.
For the mortgage industry, that means the Fed’s cut hasn’t moved the needle much or strengthened chances of rates posting a meaningful late-year slide, according to William Raveis Mortgage regional vice president Melissa Cohn.
“We’re not seeing any big movement in bond yields and we need bigger movement in order to instill more confidence,” she told Mortgage Professional America.
“I think if we saw the 10-year Treasury yield sitting at 4% or under for more than just a minute, that would help to build confidence. Getting 30-year fixed rates below 6% is what the market needs.”
Meanwhile, mortgage demand ticked higher in early December as borrowers seized on small rate declines in government programs, even while conventional borrowing costs stayed roughly flat and purchase activity slipped.
According to the Mortgage Bankers Association (MBA), overall applications increased 4.8% in the week ending December 5 on a seasonally adjusted basis, with refinance volume up 14% and 88% higher than the same week a year earlier.
Political noise has grown louder, but the Fed’s center of gravity still leans toward cautious, data‑dependent easing. That combination points to choppy, range‑bound mortgage rates rather than a smooth glide path lower, and leaves originators focused on execution and borrower education rather than betting on rapid relief.
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