The Federal Reserve announced on Wednesday that it would cut the federal funds rate by a quarter of a point for the second time this year, bringing rates to their lowest level in three years.

This latest Federal Reserve interest rate decision follows a similar cut in September, signaling the Fed’s ongoing effort to ease borrowing costs and prevent a sharper economic slowdown. Read on to learn what this change could mean for you.

What is the Federal Funds Rate and Why Does it Matter?

The federal funds rate is the rate at which banks borrow and lend to one another. While the Fed doesn’t directly set consumer loan or savings rates, its decisions influence how much it costs to borrow money across the economy.

When the Fed adjusts rates, those changes can ripple through to everyday products like credit cards, auto loans, mortgages, and savings accounts—often determining how much you earn or pay in interest over time.

What Does the Fed's Rate Cut Mean for Mortgage Rates?

If you already have a fixed-rate mortgage, the rate cut won’t change your current payment. For new fixed-rate mortgages, rates may ease gradually; they may not shift right away because they’re influenced by a mix of market factors beyond the Fed’s decision.

Adjustable-rate mortgages could see changes more quickly, and this latest cut may also create more favorable conditions for refinancing in the months ahead. For homeowners with older loans taken out during peak rate periods, keeping an eye on current trends could open the door to lower payments over time. While mortgage rates are still higher than they were a few years ago, experts expect gradual easing if inflation continues to cool and the Fed holds its current stance.

“Mortgage rates are influenced by many factors,” says Vice President of Lending Christine Whittaker. “We monitor rates every day to ensure we are offering our members competitive rates.”

If you’re wondering whether refinancing could lower your monthly payment or help you pay off your mortgage sooner, this is a good time to review your loan details and talk through your options with a lending expert.

How Are Home Equity Loans and Lines of Credit Impacted by the Rate Cut?

If you have a fixed-rate Home Equity Loan, your payment won’t change with this rate cut. However, most Home Equity Lines of Credit (HELOCs) carry variable rates tied to the prime rate. That means you could see a reduction in the interest charged on your monthly statement, typically within 30–45 days of the Fed’s decision.

Now may be a good time to review how you’re using your HELOC and talk with us about strategies to make the most of your available credit.

How Does the Rate Cut Affect Auto Loan Rates?

Auto loans are fixed-rate, meaning once you lock in your rate, it won't change over time. While the Fed doesn’t set auto loan rates directly, its decisions affect the broader lending environment—which can make financing a new or used vehicle a little more affordable in the months ahead.

The impact of this latest cut may take time to show up in new loan offers, but lower borrowing costs can create opportunities for buyers who have been waiting for the right time to make a purchase. Even a modest shift in rates can help lower your monthly payment or expand the range of vehicles that fit within your budget.

For members who recently financed a vehicle, this may also be a good time to review your loan terms to see if refinancing could lower your overall cost of borrowing.

Will Credit Cards and Personal Loan Interest Rates Be Affected by the Rate Cut?

Most credit cards are variable-rate, meaning their APRs move up or down in response to changes in the prime rate, which typically follows the Fed’s decisions. That means members carrying a balance may see a little relief as rates adjust downward.

Personal loans and lines of credit may also become slightly more affordable, depending on the specific product and lender. While the difference may be modest, even a small reduction can help cut interest costs over time—especially for those focused on paying down debt.

If you’re working to manage balances or consolidate payments, it’s a good time to review your options and make sure you’re getting the most value from your credit products.

What Does the Fed’s Rate Cut Mean for Savings Accounts?

Lower borrowing costs are welcome news for members seeking loans, but they can also mean slightly lower returns on savings products like CDs, certificates, or money market accounts. For savers, that tradeoff can feel discouraging—but it’s part of how the economy balances borrowing and saving.

If you’re reviewing your financial goals for the year, this can be a good time to check how your savings mix—such as emergency funds, short-term savings, and CDs—aligns with your current needs.

Members First Credit Union’s Commitment to You

We know that rate changes can feel complicated, especially when they affect everything from loans to savings. That’s why we’re here to walk you through your options, whether you’re buying a home, financing a car, or planning your financial future.

“Behind every loan or savings account is a real family, a student, or a small business working toward something important,” says President and CEO Courtney Fifield. “At Members First, we don’t just look at numbers—we look at people. Our promise is to walk alongside our members, offering guidance and support so that financial decisions feel a little less overwhelming and a lot more empowering. That commitment to financial wellness and community will never change, no matter how the rates move.”

Wondering how this change might affect you? Give us a call or stop by your local branch to talk with us about your options.