HELOCs Near 3-Year Lows, Home Equity Rates Hold

Image: Getty Images; Illustration: Bankrate

HELOC rates are feeling the impact of the Federal Reserve’s recent quarter-point rate cut. The $30,000 home equity line of credit fell 18 basis points to 7.63%, its lowest level in almost three years, according to Bankrate’s national survey of lenders. Meanwhile, the benchmark five-year $30,000 home equity loan held steady at 7.99% for the third week in a row. 

If the drop in HELOC rates has you thinking about tapping your home equity, Stephen Kates, senior analyst at Bankrate, says it’s important to proceed carefully. “Homeowners should first assess their financial stability and their ability to afford the loan before moving forward,” he says. “Using a loan or line of credit to cover a gap between income and ongoing expenses is a recipe for disaster. These products should be used prudently and saved for planned projects or expenses.”

What’s driving home equity rates today?

Both HELOC and home equity loan rates have declined substantially from their 2024 highs. Rates are being driven primarily by two factors — Federal Reserve policy and long-term inflation expectations. Three times in 2025, the central bank lowered interest rates by a quarter point and said inflation continues to be a concern.

“Variable rates, such as those on HELOCs, will move lower alongside the federal funds rate, allowing both new and existing borrowers to benefit,” says Kates. “Fixed home equity loan rates, similar to mortgage rates, will more closely track the 10-year Treasury yield, which responds less directly to the federal funds rate and more to broader economic conditions and inflation expectations.”

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 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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