HELOCs Retreat While Home Equity Loans Stay Steady

Image by GettyImages; Illustration by Bankrate

Reversing its recent rise, the average rate on a $30,000 home equity line of credit (HELOC) fell five basis points this week. At 8.22 percent, it’s still holding close to its highest level of the year, however, according to Bankrate’s national survey of lenders. On the flip side, the average rate on the $30,000 home equity loan was unchanged, remaining at 8.25 percent — a near-low in 2025.

Deciding whether to tap equity now comes down to your financial goals and how you plan to use the money, says James Hooper, senior vice president of production of Quontic Bank, a digital home equity lender based in New York. “With HELOC rates hovering near 2025 highs, borrowers should weigh the flexibility of a HELOC against the predictability of a fixed-rate home equity loan. If you need access to funds over time — like for ongoing home improvements — a HELOC can still make sense, especially if you have strong credit and equity. But rate sensitivity is key.”

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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.

While they’ve ticked up lately, HELOCs and home equity loans have fallen substantially from the highs they hit at the beginning of 2024, with HELOC rates in particular reaching lows not seen since 2023. Bankrate Chief Financial Analyst Greg McBride forecasts that rates will continue to decline in 2025 — especially those on HELOCs, potentially to their lowest level in three years.

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. 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 Ted Rossman, senior industry analyst at Bankrate.

“Three years ago, the average HELOC rate was below 4 percent,” Rossman says. “I just wouldn’t be in a rush to borrow $50,000 for a home renovation at 8 percent if there’s a chance you might regret it, like if you lose your job, if you could have held off, if tariffs aren’t as bad as feared, etc.”

• 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.