HELOC, Home Equity Rates Spike Higher

Image: Getty Images; Illustration: Bankrate

Home equity rates posted broad gains this week. The $30,000 home equity line climbed 16 basis points to 7.26%, according to Bankrate’s national survey of lenders. Meanwhile, the five-year $30,000 home equity loan jumped 12 basis points to 8.03%.

Even with this week’s increase, home equity rates are still the most affordable they’ve been in years. Roger Boschulte, head of vehicle and home lending products at Bank of America, points to two factors supporting demand for home equity borrowing.

“If you look at tappable equity, we’re still north of $11 trillion, which is close to record levels. That’s one aspect that’s helping to fuel origination volumes within the home equity space,” he says. “The other notable tailwind is the lock-in effect from the low mortgage rates fueled by pandemic-era policies. As clients look to access equity, they want to ensure they preserve those low mortgage rates.”

What’s driving home equity rates today?

Home equity rates are being driven primarily by two factors — Federal Reserve policy and long-term inflation expectations.

As expected, the Fed held interest rates steady at its latest policy-setting meeting in May. However, uncertainty is intensifying about its next moves. In the largest show of dissent since 1992, four Fed officials opposed the decision to keep rates unchanged.

“If not for the inflation created by the war in Iran, there’s a good chance the Fed would be cutting rates,” says Ted Rossman, principal Bankrate analyst. “They’re standing pat for now, waiting to see what happens with prices. The job market, the other side of the Fed’s dual mandate, appears relatively stable for now.” As a result, Rossman predicts that “it should be a generally flat rate environment for the balance of 2026, meaning an average around 7% for HELOCs and around 8% for home equity loans.”

Current home equity rates vs. rates on other types of credit

Because HELOCs and home equity loans use your home as collateral, their rates tend to be much less expensive — more akin to current mortgage rates — than the interest charged on credit cards or personal loans, which aren’t secured.

While average rates are useful to know, the individual offer you receive on a HELOC or new home equity loan also reflects additional factors, such as your creditworthiness and financials. Then there’s the value of your home and the size of your ownership stake. Lenders generally limit all your home loans (including your mortgage) to a maximum of 80% to 85% of your home’s worth.

Keep in mind: Even if you’re able to secure a favorable rate from a lender, home equity products are still relatively high-cost debt.

Unlock your home’s value

A fixed-rate home equity loan offers a lump-sum payout and a predictable repayment schedule.

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