As expected, the Federal Open Market Committee (FOMC) cut interest rates by 25 basis points today, a move that will lower rates for various types of credit, though any impact mortgage rates is less clear.
“In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks,” the FOMC said in a statement. “The Committee decided to conclude the reduction of its aggregate securities holdings on December 1. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2% objective.
In assessing the appropriate stance of monetary policy, the FOMC said it would continue to monitor the implications of incoming information for the economic outlook, and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of those goals.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; and Christopher J. Waller. Voting against this action were Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting, and Jeffrey R. Schmid, who preferred no change to the target range for the federal funds rate at this meeting.
Industry Reaction
“While the full economic impact of such a move will unfold over time, early indicators suggest that even modest rate cuts can have meaningful consequences for consumer behavior and financial health,” said Michele Raneri, TransUnion VP and Head of U.S. Research and Consulting.
Raneri added that there has already been a notable uptick in year-over-year activity across several credit products. As highlighted in TransUnion’s Q2 Credit Industry Insights Report (CIIR), mortgage originations rose 5.1% in the first quarter 2025 (the latest quarter for which originations data is available), while the home equity market surged by 12% for the same period—both occurring prior to the most recent rate cut announcements. These trends suggest that consumer appetite for credit is strengthening, and further rate reductions could accelerate this momentum.
“Mortgage rates, in particular, have responded swiftly. Just in the past week, they fell to their lowest level in over a year,” Raneri added. “While mortgage rates don’t always move in lockstep with the Fed’s target rate—often pricing in anticipated future cuts, the continued easing of monetary policy may well push rates even lower.”
According to Raneri, this presents a tangible opportunity for consumers. For example, a new home buyer securing a $350,000 mortgage at a 6.75% interest rate could potentially see monthly payments drop by nearly $150 from peak highs with another 25-basis point reduction.
“Over time, such savings can significantly ease household budget pressures. Beyond mortgages, lower interest rates can also reduce borrowing costs for other credit products, including auto loans, personal loans, and credit cards,” Raneri said. “This can stimulate consumer spending and improve access to credit, particularly for those with tighter financial constraints.
Those watching mortgage rates may not see immediate movement, said Melissa Cohn, William Raveis Mortgage Regional VP. “The initial reaction in bonds is muted, and mortgage rates are steady, even as they dropped in recent weeks to a current 6.13% (down from 6.37% in early October).” She added that rates could keep falling.
Yuval Golan, Waltz, CEO and Founder, agreed: “The timing of the cut is especially advantageous for real estate investors looking to refinance or buy new properties at a discount during the slow season for sellers, For example, previously sidelined foreign real estate investors, who are less affected by the seasonality of real estate cycles, can take advantage of lower rates.”
