WASHINGTON–The Federal Reserve’s Open Market Committee will kick off two days of meetings beginning today, before adjourning tomorrow with the markets and financial institutions expecting another rate reduction.
“With the Federal Open Market Committee expected to implement another 25-basis point reduction in its target interest rate at this week’s meeting, consumers and credit markets are poised to feel the ripple effects,” TransUnion said in a statement. “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.
Uptick in Activity
TransUnion said it has already “observed a notable uptick in year-over-year activity across several credit products.”
“As highlighted in our latest Q2 Credit Industry Insights Report (CIIR), mortgage originations rose 5.1% in Q1 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,” the company said. “These trends suggest that consumer appetite for credit is strengthening, and further rate reductions could accelerate this momentum.”
Mortgage Rates Move Quickly
Mortgage rates, TransUnion noted, in particular, have responded swiftly.
“Just in the past week, they fell to their lowest level in over a year. 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,” the company stated. “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.”
TransUnion added that while inflation continues to exert pressure on household budgets, rate cuts offer a potential counterbalance by lowering debt servicing costs.
America’s Credit Unions’ economists have forecast a rate cut during this meeting, as well.
