According to CME FedWatch, futures put a 59% probability on a 25bp hike at the September 15–16 meeting, up from 54% a month ago, with August CPI on the 11th the last word. The 2-year has climbed about 90bp this year to 4.37%, and the 10-year sits near 4.78%, its highest since January 2025.

The last hike was July 2023, and the last cut was December 2025, leaving the target range at 3.50–3.75%. A hike now would be the fastest turn from cutting to hiking since 1998–99, measured from the last cut, and every loan originated in the three years since has only ever seen rates fall. It is worth a refresher on where a hike lands.

Think of a hike as two events: one for the book you have, one for the book you are about to build. On the book you have, floating-rate collateral reprices and fixed does not, but the cash flows move in both cases. Cards and HELOCs reprice off prime within a billing cycle or two, so card trust yield rises before delinquencies do and, all else equal, excess spread widens, while payment rates drift lower as minimums rise. Existing auto, mortgage, and installment loans keep their terms, but borrower behavior does not hold still: prepayments slow as the refi and trade-in incentive disappears, pools extend, weighted average life lengthens, and excess spread accrues over a longer horizon.

On the book you are about to build, everything moves. Auto affordability worsens, terms lengthen, and negative equity deepens. New auto ABS funds seasoned lower-APR collateral at higher coupons, compressing excess spread, and subprime lenders on floating warehouse lines feel it before their deals price unless they are hedged. Fintech unsecured and BNPL credit boxes tighten. Mortgage lock-in deepens, and second-lien and HELOC securitization, already $24 billion through late July against $29 billion for all of 2025 according to Bank of America Securities, keeps growing as first-lien rates rise. Outside mortgages, the longest-dated fixed-rate collateral, solar loans especially, sees the largest price and spread moves because it carries the most duration.

CCM read: This is not 2023. That hike landed on top of 525bp on a book still normalizing out of stimulus. This one would land on a book the New York Fed says has held steady across most products for two years, with card delinquency transitions flat in Q2 and auto elevated and edging up. A single 25bp move is a margin event for issuers before it is a credit event for borrowers. What would change that is two or three more on top of a real-wage squeeze that is already four months old.