HELOCs And Home Equity Are Flat

Image by GettyImages; Illustration by Bankrate

An uneventful week for home equity rates. The average rate on a $30,000 home equity line of credit (HELOC) was unchanged at 8.27 percent, according to Bankrate’s national survey of lenders. The average rate on the $30,000 home equity loan also held steady at 8.26 percent.

Since the beginning of June, HELOCs and home equity loan rates have been nearly in lockstep — a situation we haven’t seen since 2023. Tai Christian, co-founder and president of Arrive Home, a Utha-based facilitator of national affordable housing programs, says it’s anyone’s guess how long the parity will last. Whether one ends up being more affordable than the other depends largely on the Federal Reserve, which “doesn’t meet again until the end of the month to decide if rates will change,” she says. “At this point, both remain better options when compared to the interest rates on alternatives, such as credit cards.”

What’s driving home equity rates today?

Rates on HELOCs and home equity loans are being driven primarily by two factors: lender competition for new customers and the Federal Reserve’s actions. The Fed especially impacts the cost of variable-rate products like HELOCs.

Both HELOCs and home equity loans have declined substantially from their highs reached at the beginning of 2024, although they have moved off the lows they achieved this year. Bankrate Chief Financial Analyst Greg McBride still forecasts that rates will decline in 2025 — especially those on HELOCs, potentially to their lowest level in three years.

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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.

Of course, the individualized offer you receive on a particular HELOC or new home equity loan reflects additional factors like your creditworthiness and financials. Then there’s the value of your home and your ownership stake. Lenders generally limit all your home-based loans (including your mortgage) to a maximum 80 to 85 percent of your home’s worth.

Even if you are able to secure a good rate from a lender, home equity products are still relatively high-cost debt, notes Rossman. “With average home equity loan and line of credit rates in the 8 percent range right now, that’s close to the border of what distinguishes between lower- and higher-cost debt,” he says. “It’s not nearly as low as the sub-4 percent rates we saw three years ago, but not as high as the 10+ percent rates that we observed a year and a half ago.”

• Methodology
  

  The Bankrate.com national survey of large lenders is conducted weekly. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison.