NASHVILLE, Tenn. (RFD-TV) — Cheaper mortgages and a potential capital-rule tweak could ease credit in small towns.
Thirty-year fixed rates ticked down to 6.30 percent (from 6.34 percent a week ago; 6.32 percent on the year) and 15-year rates to 5.53 percent (5.55 percent last week; 5.41 percent a year ago), per Freddie Mac — helpful for farm families buying homes, refinancing, or shifting equity.
Meanwhile, in Washington, community bankers met with regulators as the Treasury and the FDIC moved to review the Community Bank Leverage Ratio (CBLR).
Rural lenders say a fix to the CBLR could unlock more credit for farms, small businesses, and hometown projects. Congress created the CBLR in 2018 as a simple, optional capital test, but regulators set it at 9 percent and layered on big-bank definitions, limiting who can use it.
Farm-Level Takeaway: Slightly lower rates help at the margin; bigger wins come if CBLR reforms unlock more Main Street ag credit.
Fix CBLR To Free Rural Bank Lending Capacity
Speaking at the Federal Reserve’s Community Bank Conference, Fed Governor Michelle Bowman called the rule “well-intentioned” but underperforming, noting only about 40 percent of eligible community banks opted in — far fewer among institutions over $1 billion.
For ag communities, that means more capital tied up on paper and fewer dollars available for operating lines, land notes, equipment, and grain storage.
Bowman noted fewer than half of eligible banks use the optional rule, and lenders say the 9-percent threshold and lingering big-bank definitions keep them on the sidelines.
According to the American Bankers Association, industry advocates argue regulators can fix this without new legislation: lower the threshold to 8 percent (still well-capitalized), raise and index the $10 billion size cap so more true community banks qualify, and stop penalizing banks for holding safe assets like cash and Treasuries in leverage calculations. Those targeted changes would expand participation and give rural banks more room to lend—without weakening safety and soundness.
ABA leaders, including Vice Chair Cathy Owen and board member Tom Fraser, argued for practical fixes: calibrate CBLR at 8%, simplify capital definitions, and avoid double-asking for risk-weighting when banks opt into CBLR.
For rural borrowers, freeing up community-bank balance sheets could mean steadier home loans, operating lines, and ag real-estate financing as winter planning ramps up.
Farm-Level Takeaway: A right-sized CBLR would free community bank balance sheets and support more affordable, timely ag credit on Main Street.
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