HELOC Rates Hit Lowest Level In Three-Plus Years

Image: Getty Images; Illustration: Bankrate

Home equity rates became more affordable in the latest week. The $30,000 home equity line of credit sank 14 basis points to 7.18%, its lowest level in more than three years, according to Bankrate’s national survey of lenders. Meanwhile, the five-year $30,000 home equity loan fell three basis points to 7.84%. 

“A HELOC or a home equity loan tends to be one of the lowest interest rate products out there for a consumer when they’re looking to find credit or some sort of debt financing,” says Saytan Merchant, senior vice president of auto and mortgage at TransUnion. “There are a lot of consumers out there who could probably stand to benefit from consolidating loans and getting a lower rate. That bodes well for the home equity lenders.”

What’s driving home equity rates today?

Home equity rates are driven primarily by two factors — Federal Reserve policy and long-term inflation expectations. The Fed left interest rates unchanged at its January meeting, as it continues to monitor inflation and the job market. Looking ahead to the rest of the year, Bankrate’s senior industry analyst Ted Rossman forecasts the Fed will deliver three quarter-point cuts in 2026.

“Inflation continues to moderate, albeit slowly, and the job market appears to be stabilizing after a run-up in the unemployment rate,” he says. “Risks appear fairly balanced at the moment, and the Fed will likely take some time to determine its next move. We’re soon to get a new Fed Chairman, as well.”

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 particular HELOC or new home equity loan also reflects additional factors, like 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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