Consumers have mixed reactions to tomorrow’s 25-basis point rate cut by the FOMC on Wednesday, according to a WalletHub survey.
“Interest rates on financial products, from credit cards to car loans and mortgages, are generally based on some sort of benchmark rate, which in turn is influenced by the Federal Reserve’s target interest rate in one way or another,” WalletHub noted. “So when the Fed’s target rises or falls, the interest rates consumers pay, and the overall cost of borrowing do too. Unfortunately, the rates we earn on deposit accounts aren’t nearly as quick to react. According to the survey:
- Sixty-five percent of Americans feel indifferent or upset about the Fed cutting interest rates.
- Nearly 4 in 5 people think it is not a good time to borrow.
- Fifty-nine percent of Americans say that a quarter-point rate cut by the Fed will not make a difference in their life.
Expected Impacts
Based on the trends following previous Fed interest rate changes, here’s what WalletHub anticipates.
Mortgages: WalletHub’s analysts estimate that the upcoming October rate cut has decreased the cost of new mortgages by around 11 basis points, which translates to roughly $9,720 over the life of a 30-year loan, assuming the average home loan of $374,288.
“We expect to see mortgage rates remain relatively flat with only a slight downward trend in 2026,” said Charles Goodwin, Kiavi VP of Bridge and Debt Service Coverage Ratio Lending. “While the Fed is taking action to ease short-term rates, long-term yields are likely to remain at current levels. For rates to drop considerably, we would need to see either a sharp decline in the 10-year Treasury yield or a permanent breakdown in inflationary pressures, which would force the Fed to signal aggressive, sustained rate cuts to drive down longer-term bond yields.”
Credit Cards: A 25-basis-point decrease (98% probability) will save credit card users at least $1.92 billion in interest over the next 12 months. Due to the 525 basis points in Federal Reserve rate hikes from March 2022 to July 2023, credit card users were set to pay roughly $40 billion more in interest during 2024 than they would have otherwise.
Auto Loans: WalletHub expects the average APR on a 48-month new car loan to drop by around 12 basis points in the months following the Fed’s 25-basis-point rate cut. The average APR on a 48-month new car loan rose from 4.87% in February 2022 to 7.51% in August 2025 (the most recent data available). That’s a 264-basis-point increase in a period characterized by 525 basis points in Fed rate hikes and 125 basis points in Fed rate cuts.
Deposit Accounts: Little, if any change, is expected in APYs. Online savings accounts did react to previous Fed rate hikes, with yields increasing by an average of 329 basis points from January 2022 to August 2024 (525 basis points in Fed hikes during that period). Following a pair of 25-basis-point rate cuts in December 2024 and September 2025, yields have decreased by 44 basis points. Yields on branch-based checking accounts have increased by 27 basis points since December 2024.
The post Consumers Split on Expected Fed Rate Cut as Borrowing Costs Stay High first appeared on The MortgagePoint.
