After the Fed Cut: What to Change—and What to Leave Alone—in Your Plan

Q: When does a refinance usually make sense?

Often when the rate drop is ~0.75–1.00 point and breakeven occurs in ~3–4 years or less, given fees and how long you’ll keep the loan.

HFF Staff Writer
Sep 29
4 min read

Updated: Sep 30

Calculator and pen on documents with financial charts and handwritten notes, including "Can we do this?" Black and white setting.

TL;DR: On Sept. 17, 2025, the Federal Reserve lowered the federal funds rate by 0.25%. For many households, this is a tune-up moment, not a full remodel. Consider tightening cash buckets, evaluating short CD ladders if suitable, re-running refinance math, keeping bond ladders high-quality, and confirming Roth/catch-up settings. Outcomes vary by your goals, timeline, and tax situation.

What actually changed—and why it matters

Direct answer: A single rate cut typically nudges borrowing costs lower over time and, eventually, lowers yields on many cash accounts. Rather than overhaul your plan, consider measured adjustments that reflect your spending timeline and risk tolerance.

Details: Deposit rates at banks and credit unions may adjust at different speeds. That lag can present a short window to improve yields on “tier-two” cash (money needed in 6–18 months), while keeping true emergency funds fully liquid. Actual results vary by institution and account type.

Risk note: Bank products (e.g., CDs, savings) may be FDIC/NCUA-insured subject to issuer and program limits. Early-withdrawal penalties can apply. Marketable securities are not FDIC/NCUA-insured.

How should I handle cash—HYSAs and CDs?

Direct answer: Keep your emergency fund liquid in a high-yield savings account. You may lock a portion of near-term cash into a short CD ladder if suitable and if your timeframe exceeds the CD’s term. APYs may decline if policy eases; banks sometimes adjust at different speeds.

Quick steps:

Sweep idle checking into a HYSA for liquidity.
If appropriate, build a 3–4-rung CD ladder (e.g., 6, 9, 12, 18 months) so something matures regularly.
Avoid chasing tiny APY differences that add lock-in risk for upcoming expenses.

Risk note: Verify titling and coverage limits; confirm penalties and how interest is calculated.

Should I refinance or change my home-buying plan?

Direct answer: If your current mortgage rate is materially higher than available rates, re-run the math. A refinance may make sense when the rate drop is ~0.75–1.00 percentage point and your breakeven on closing costs is within ~3–4 years. If you’re purchasing, anchor decisions to an affordable payment today, with the option to revisit a refi later if rates ease.

Variables that matter: Credit profile, points vs. no-points, property type, loan size, and how long you expect to hold the mortgage.

Risk note: A lower headline rate does not guarantee savings after fees; always calculate breakeven and consider opportunity costs.

What about bonds and my overall allocation?

Direct answer: You may improve the predictability of income and withdrawals by mapping near-term spending to short-duration, high-quality instruments and using intermediate-term core bonds for years 5–10. Equities remain the growth engine for long-term goals. We generally avoid funding next year’s spending with equities.

A practical sleeve approach:

Years 0–2: Cash/T-bills to cover planned withdrawals.
Years 3–5: Short, high-quality bond ladder.
Years 5–10: Intermediate-term, high-quality core bonds.
10+ years: Diversified equities aligned with your risk profile.

Risk note: Fixed-income securities are subject to interest-rate, credit, and inflation risk. Bond prices can fall if rates rise; lower-quality issuers may default. Consider alignment with your Investment Policy Statement.

I’m retired—do I change my withdrawal strategy now?

Direct answer: Probably not. Sequence-of-returns risk typically matters more than a modest shift in cash yields. Maintain 12–24 months of planned withdrawals in cash/short bonds, rebalance periodically, and adjust only if your spending needs or timelines have changed.

Risk note: Rebalancing can trigger taxes; review account types (taxable vs. IRA/Roth) and lot selection.

Any tax or plan housekeeping I should do?

Direct answer: This can be a good time to evaluate Roth conversions (especially in market pullbacks), confirm catch-up contributions, and verify plan documents reflect current SECURE-related rules. Coordination with your CPA is essential.

Risk note: Tax laws and interpretations can change. This material is not tax or legal advice; consult your tax professional.

Your 30-day action list

Tighten cash buckets: Keep emergency funds liquid; consider a short CD ladder for 6–18-month cash if suitable.
Run the mortgage math: Model refi scenarios, including fees and breakeven timing.
Audit bond duration & quality: Avoid “reach for yield” that adds credit risk unintentionally.
Refresh withdrawal runway: Hold 12–24 months of spending in cash/short bonds; review rebalancing bands.
Confirm plan settings: Catch-up contributions, Roth elections, beneficiary designations, and IPS alignment.

Want a fiduciary to translate policy shifts into a customized plan across cash, debt, taxes, and investments? Let’s build your Custom Financial Blueprint together.

FAQ

Should I move all my cash from HYSA to CDs now? No. Keep your emergency fund liquid and ladder only the portion you won’t need for 6–18 months. Early-withdrawal penalties may apply; confirm FDIC/NCUA coverage and ownership titling.

When does a refinance usually make sense? Often when the rate drop is ~0.75–1.00 point and breakeven occurs in ~3–4 years or less, given fees and how long you’ll keep the loan.

Do I need to overhaul my portfolio after one Fed move? Usually not. Focus on withdrawal runway, quality bond ladders, and periodic rebalancing. Note that rebalancing can create taxable events.

Resources

Board of Governors of the Federal Reserve System. “Federal Reserve Issues FOMC Statement.” 17 Sept. 2025.
Board of Governors of the Federal Reserve System. Summary of Economic Projections, September 17, 2025. 17 Sept. 2025.
Freddie Mac. “Primary Mortgage Market Survey® (PMMS) Archives.” 25 Sept. 2025.
Internal Revenue Service. “Final Regulations on SECURE 2.0 Catch-Up Provisions.” 15 Sept. 2025.

Disclosures & Important Information

This material is for informational and educational purposes only and is not individualized investment, tax, accounting, or legal advice. Investment decisions should be made based on your objectives, risk tolerance, time horizon, and financial circumstances. All investing involves risk, including loss of principal. Fixed-income securities are subject to interest-rate, credit, and inflation risk. Bank products (e.g., CDs, savings accounts) may be FDIC/NCUA-insured subject to issuer and program limits; marketable securities are not FDIC/NCUA-insured. Mortgage and refinancing outcomes depend on rates, fees, and borrower qualifications. Halter Ferguson Financial (“HFF”) is a registered investment adviser. Registration does not imply a certain level of skill or training. For personalized advice, please contact us.