When news breaks that the Federal Reserve is cutting rates, many people expect to see immediate changes in their local lending rates. However, it’s important to understand that a Fed rate cut doesn’t directly translate to lower rates for your mortgage or loan. The Federal Reserve lowers the federal funds rate, which impacts the prime interest rate, but it doesn’t mean your local rates will automatically follow suit.
Why the Fed Rate Cut Isn’t Apples to Apples
The rate the Fed adjusts is the federal funds rate, which influences the interest rates banks charge each other for overnight loans. Over time, this adjustment trickles down to affect the prime interest rate—the rate banks offer their most creditworthy customers. But this process isn’t immediate, and it’s not a one-size-fits-all situation for every community or financial institution.
At Marshfield Medical Center Credit Union, we keep a close pulse on the local economy and how it may affect lending rates for our members. While a federal rate cut may eventually impact local rates, the speed and extent of that impact can vary.
What Does This Mean for You?
When you hear about a rate cut from the Fed, it’s essential to reach out to MMCCU. Our team will help you understand how (or if) the cut affects your existing loans or future borrowing opportunities. We’ll also review the local economic conditions and work with you to find the best possible rates based on your individual needs.
Bottom line: Before you assume that a Fed rate cut means lower payments or a better deal on a new loan, contact MMCCU. We’re here to help you navigate the complexities of rates and provide expert advice on how it applies to your financial situation.
