Another Fed Meeting and Rate Expectations

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With the central bank of the United States, also known as the Federal Reserve or Fed, set to meet this week, there is once again speculation around whether rates will be raised, cut, or left unchanged. The odds strongly favor the Fed holding rates steady, but brokers should still be prepared for the impact if a rate cut occurs.

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If the Fed were to lower rates, borrowing costs would trend lower for Orion broker clients and consumers overall. At the same time, bank customers would likely see savings rates decline as we move further into February.

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How a Fed Cut Impacts Borrowers

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Americans carrying credit cards, adjustable rate mortgages, and home equity lines of credit would see monthly payments decrease if the Fed lowered its key short term interest rate by a quarter point. These are revolving loans with variable rates that react quickly to Fed policy. Auto loan borrowers may also benefit, although competition in the auto lending space has already kept rates relatively low.

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The impact on 30 year mortgages and other long term loans would likely remain muted, as we have seen consistently throughout 2025 and into 2026. Long term mortgage rates tend to follow inflation expectations and broader economic outlooks rather than Fed moves directly.

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What Brokers Should Watch Closely

If rates are cut, HELOCs and ARM loans would typically become less expensive within weeks, since their rates are tied to the prime rate, which follows the Fed’s benchmark rate. Credit card rates, which currently average around 25 percent depending on the source, would also decline, although recent discussions around potential caps add uncertainty.

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Orion clients have already seen lower 30 year mortgage rates due in part to easing global tensions. HELOC rates are also significantly lower than in recent years as competition continues to increase. While a quarter point cut on a $30,000 credit line may only reduce the minimum payment by a few dollars, the longer term impact on ARMs that adjust annually could be more meaningful.

Opportunity for Refinancing Conversations

If banks are able to charge less on loans, they will also have less flexibility to pay higher interest on deposits. Many savings accounts and CDs continue to offer modest yields, creating an opportunity for borrowers to reconsider how they manage high interest debt.

As your clients evaluate their options, remember that refinancing to consolidate or pay down expensive credit card debt is an area where Orion and our brokers excel. Be sure to connect with your Orion AE to explore programs that can help your borrowers take advantage of today’s rate environment.

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